By TIOL News Service

MUMBAI, JUNE 03, 2015: THE appellants have a website wherein a number of photographs are available for a viewer to see for free and choose after browsing. However, he can download the data only after he enters into an agreement with the appellant and agrees with the terms and conditions as stipulated by appellant. It is also one of the conditions of the appellant that the viewer has to pay for the amount as quoted by the appellant and on such payment the link is provided to the viewer/client for downloading the image.

On a representation made, the Office of the Asst. Commissioner, Service Tax, Div-II informed the appellant that the said service provided by the appellant would fall under taxable category of 'Online information and Data base access or Retrieval service'.

Not satisfied with this clarification, the appellant preferred an appeal before the lower appellate authority, who upheld the department stand.

Against this order, the appellant is before the CESTAT.

Adverting to the inovices raised, the appellant submitted that they are restricting the client to the usage of the photographs which are downloaded by them in the sense that the photograph is allowed to be used for a limited purpose and limited period, for the purpose of ad insertion in magazine or purpose of enhancement of brand etc. and, therefore, it would not get categorised under 'Online information and Data base access or Retrieval service.' That they have got copyright over the photographs which are displayed on the websiteand hence they charge an amount of copyright and during the relevant period said services were not covered under the service tax net. Reliance is placed on the decision in Dewsoft Overseas P. Ltd. - 2008-TIOL-1525-CESTAT-DEL.

The AR while justifying the department stand submitted that the client who has selected the photograph or image has access to the same only through the computer; hence it will fall under the category of 'Online information and Data base access or Retrieval service'.

The Bench extracted the definition of the alleged service and observed -

++ It is an admitted fact in the case in hand, that the appellant's client has an access to the image or photograph, which he want to download for the purposes either to place an ad or for research can be done so only through the computer network. Further, we find that the appellant's website allows the access and retrieve the data or information contained therein which are free for the purpose of viewing on the monitor, but has to be paid for downloading in the for further commercial use. We find the claim made by the counsel that as to at the most the issue would be covered under the Copyright Act, which we feel is incorrect submission as the information or data contained in website may be having a copyright, but when this information is only available on the website for accessing and subsequent downloading, the copyright on the said images becomes incidental and the main activity so far as the appellant's client is concerned is making information available for retrieval.

++ The service as rendered by the appellant would be web-based service providing access or downloading of a digital content inasmuch as the images and photographs are nothing but a digital content stored in website.

The Bench also distinguished the decisions cited by the appellant and after drawing support from the Delhi High Court decision in Alcatel Lucent, Canada where it is held - "That a computer programme may be copyrightable as intellectual property, does not alter the fact that once in the form of floppy disc or other medium, the programme is tangible, movable, and available in the market place.", observed that the said decision can be applied to the case in hand since the access to said photograph (copyrightable) and retrieval thereof by the client of appellant is on a consideration.

The order of the appellate authority was held to be correct and the appeal was rejected.

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(See 2015-TIOL-1013-CESTAT-MUM)