Meaning of “online information and database access or retrieval services” (OIDAR service) :
Section 2(17) of IGST Act states as follows –
“Online information and database access or retrieval services”(OIDAR service) means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as –
(a) advertising on the internet
(b) providing cloud services
(c) provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet
(d) providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network
(e) online supplies of digital content (movies, television shows, music, etc.)
(f) digital data storage; and
(g) online gaming.
In Thai Airways International Public Co Ltd. v. Commissioner (Adjn) (2015) 49 GST 342 = 53 115 (CESTAT 2 v 1 decision), it has been held that maintaining data base on real time basis of flights operated by assessee for Computer Reservation System (CRS)/Global Distribution System (GDS) is ‘Online Information and Data Access or Retrieval Services’.
Using internet itself does not mean it is OIDAR service – Using the internet, or some electronic means of communication, just to communicate or facilitate outcome of service does not always mean that a business is providing OIDAR services – para 12 of CBE&C Circular No. 202/12/2016-ST dated 9-11-2016.
Services that are covered under OIDAR Service – OIDAR services covers services which are automatically delivered over the internet, or an electronic network, where there is minimal or no human intervention are covered under OIDAR.
In practice, this can be either (i) where the provision of the digital content is entirely automatic e.g, a consumer clicks the ‘Buy Now’ button on a website and either: the content downloads onto the consumers device, or the consumer receives an automated e-mail containing the content (ii) where the provision of the digital content is essentially automatic, and the small amount of manual process involved does not change the nature of the supply from an OIDAR service.
All ‘electronic services’ that are provided in the ways outlined above are OIDAR services – para 14 of CBE&C Circular No. 202/12/2016-ST dated 9-11-2016.
Indicative List of OIDAR services – Following is indicate list of OIDAR services [para 16 of CBE&C Circular No. 202/12/2016-ST dated 9-11-2016] –
(1) Website supply, web-hosting, distance maintenance of programmes and equipment – (a) Website hosting and webpage hosting (b) automated, online and distance maintenance of programmes (c) remote systems administration (d) online data warehousing where specific data is stored and retrieved electronically (e) online supply of on-demand disc space.
(2) Supply of software and updating thereof –(a) Accessing or downloading software (including procurement/accountancy programmes and anti-virus software) plus updates (b) software to block banner adverts showing, otherwise known as Bannerblockers (c) download drivers, such as software that interfaces computers with peripheral equipment (such as printers) (d) online automated installation of filters on websites (e) online automated installation of firewalls.
(3) supply of images, text and information and making available of databases – (a) Accessing or downloading desktop themes (b) accessing or downloading photographic or pictorial images or screensavers (c) the digitised content of books and other electronic publications (d) subscription to online newspapers and journals (e) weblogs and website statistics (f) online news, traffic information and weather reports (g) online information generated automatically by software from specific data input by the customer, such as legal and financial data, (in particular such data as continually updated stock market data, in real time) (h) the provision of advertising space including banner ads on a website/web page (i) use of search engines and Internet directories.
(4) supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events – (a) Accessing or downloading of music on to computers and mobile phones (b) accessing or downloading of jingles, excerpts, ringtones, or other sounds (c) accessing or downloading of films (d) downloading of games on to computers and mobile phones (e) accessing automated online games which are dependent on the Internet, or other similar electronic networks, where players are geographically remote from one another.
(5) supply of distance teaching – (a) Automated distance teaching dependent on the Internet or similar electronic network to function and the supply of which requires limited or no human intervention, including virtual classrooms, except where the Internet or similar electronic network is used as a tool simply for communication between the teacher and student (b) workbooks completed by pupils online and marked automatically, without human intervention.
Indicative list of non-OIDAR services – Following are some services which will not get covered under OIDAR service -(i) Supplies of goods, where the order and processing is done electronically (ii) Supplies of books, newsletters, newspapers or journals (iii) Services of lawyers and financial consultants who advise clients through email (iv) Booking services or tickets to entertainment events, hotel accommodation or car hire (v) Educational or professional courses, where the content is delivered by a teacher over the internet or an electronic network (in other words, using a remote link) (vi) Offline physical repair services of computer equipment (vii) Advertising services in newspapers, on posters and on television – para of CBE&C Circular No. 202/12/2016-ST dated 9-11-2016.
Computer Reservation System for which payment made by HO outside India – In British Airways v. Commissioner (2015) 76 VST 497 (CESTAT), the appellant had a branch office in India. However, the services of computer reservation system (CRS) were received outside India. It was held that service tax is not payable (under reverse charge).- followed in Thai Airways International Public Co Ltd. v. Commissioner (Adjn) (2015) 49 GST 342 = 53 115 (CESTAT 2 v 1 decision) * Qatar Airways v. CST (2016) 57 GST 72 = 71 295 (CESTAT).
These decisions will need review in view of changes introduced in definition of OIDAR service.
In Jet Airways v. CST (2017) 97 CST 225 (CESTAT), it has been held (in my view rightly) that computer reservation system is OIDAR Service. If availed in India from outside India, service tax is payable under reverse charge.