ACCESS AND/OR RETRIEVAL

Date of Introduction: 16.07.2001vide Notification No.4/2001-ST dt.09.07.2001.

Definition:

As per section 65(19), 1994, the term “On-line information and data base access or retrieval” means providing data or information, retrievable or otherwise, to a customer in electronic form through a computer network. The words “Data”, “information”, “electronic form” and “computer network” have the same meanings assigned to them in the Information Technology Act, 2000.

The definitions given in the Information Technology Act, 2000 are as follows:­

“Data” means a representation of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalized manner, and is intended to be processed, is being processed or has been processed in a computer system or computer network, and may be in any form (including computer printouts, magnetic or optical storage media, punched cards, punched tapes) or stored internally in the memory of a computer.

“Information” includes data, text, images, sound voice, codes, computer programmes, software and data bases or micro film or computer generated micro fiche.

“Electronic form” with reference to information means any information generated, sent, received or stored in media, magnetic, optical computer memory, microfilm, computer generated microfiche or similar device.

“Computer network” means the interconnection of one or more computers through­

(i) the use of satellite, microwave, terrestrial line or other communication media; and

(ii) terminals or a complex consisting of two or more interconnected computers whether or nor the interconnection is continuously maintained.

Taxable events and scope of service:

As per section 65(72) (zh), taxable service means any service provided to a customer, by a commercial concern, in relation to on­line information and database access or retrieval or both in electronic form.

In the context of this service, it may be relevant to point out the manner in which on-line information and database access/retrieval is generally made available. First, function is that of what is commonly known as Internet Service Providers (ISPs). The ISPs provide telecommunication network or gateways necessary to access messages and databases and other information holdings of content providers. The second element is on-line information provision services which includes database services, provision of information on web-sites, provision of on-line data retrieval services from data bases and other information, to all or limited number of users and provision of on-line information by content providers. Internet service providers (ISPs) provide access to the web-sites through the computer network and the web-sites. Web-sites, in turn, provide the database or information. Some of the well-known ISPs operating in India are VSNL, MTNL, Satyam online, Bharti, Tata, RPG, HCL, Wipro, BPL, Mantra online, Dishnet. They normally charge the customers on the basis of usage of time (hours). They also provide dedicated lease lines on lump-sum payment basis. Clearly ISPs provide service in relation to on-line information and database access or retrieval. They are an integral part of the internet operations and without their service, the data or information can neither be accessed nor retrieved. They are, therefore, liable to pay Service Tax on the amount charged from the customers whether on usage time basis or on lease line basis.

As regards paid web-sites, a few examples of Indian dot companies are, Indiainformer.com, CIIonline.com, who charge the customer for certain specific information contained in their website either in advance or credit basis. They shall be also liable to pay Service Tax on the paid services provided by them. It is obvious that where the information is supplied free of charge, no Service Tax is payable.

      (Ministry’s F.No.B-11/1/2001-TRU dt.09.07.2001)

Value of Taxable Service:

The value of Taxable service shall be the gross amount charged by the service provider for such service rendered by him. (Section 67 of Finance Act, 1994 as amended)

Exemption and Exclusion:

In e-commerce transactions, no service of online information and database access/retrieval is involved. Therefore, e-commerce transactions will not ordinarily be covered under the Service Tax net. Normally, the web sites do not charge the surfers for information on sale of goods or services offered by them. If at all they do, Service Tax will be payable on the amount charged for providing the information.

1. The inter-connectivity services provided by one ISP to another and charges recovered for such services are not liable to Service Tax.

 

2. The cyber cafés provide only the infrastructure such as computer terminals and internet connection. It is the ISP or websites who provide on-line access or retrieval of information. Therefore, cyber cafés are not liable to pay Service Tax. Services provided by ISP to cyber café are taxable and the ISP will pay the tax on charges realized from the cyber cafe.

 (Ministry’s F.No.B-11/1/2001 TRU dtd.9.7.2001)

 

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