This article explores the significance of ownership of data in determining whether a particular transaction amounts to the provision of Online Information and Database Access or Retrieval (OIDAR) services under Indian indirect tax law. The question often arises in complex B2B arrangements involving digital infrastructure—does the act of making existing data accessible constitute OIDAR, even when the data belongs to the recipient?
The central legal issue examined in recent jurisprudence is whether a service provider must own or originate the data it “provides” in order to fall within the OIDAR tax net. In other words, can a party that merely transmits or formats another’s data be said to “provide” it under the definition? This article analyzes the leading tribunal decisions on this question – United Telecom Ltd. (CESTAT Bangalore), British Airways (CESTAT Delhi), and the recent larger–bench Air India Ltd. (CESTAT Delhi, 2025) – to demonstrate that ownership of the underlying information is decisive.
Understanding OIDAR Services
Under Service Tax Law
The term “Online Information and Database Access or Retrieval (OIDAR)” was defined under Section 65(75) of the Finance Act, 1994, as amended from time to time as under:
“Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network.”
Thus, to classify an activity as OIDAR under this law, the following elements must be satisfied:
- Data or information must be provided to any person;
- It must be accessible or retrievable;
- It must be made available electronically via a computer network.
Crucial Element – The Word “Provided”
The term “provided” becomes central to the debate. As per standard dictionaries, the term is defined as follows;
- Cambridge: “To give someone something that they need.”
- Collins: “If you provide something that someone needs or wants, you make it available.”
- Merriam-Webster: “To supply or make available.”
Based on the above, it appears that the term provided means supplying something to someone who does not possess it.
Thus, providing data in the context of OIDAR services refers to supplying such data that is not available to the service recipient.
Is OIDAR Triggered When Data Belongs to the Recipient?
Consider a scenario: A company shares its own data with a third-party digital platform, which uses it to enable sales (like ticket bookings) or display services. The platform organizes and facilitates the usage of this data, but does not own or generate the information. Can this be considered a supply of OIDAR service to the company?
This very issue came under scrutiny in a series of cases.
Case Analysis: United Telecom Ltd. – The Foundational Ruling [2009]
In United Telecom Ltd., the Company had entered into a contract with the Andhra Pradesh Government to build, own, and operate a Wide Area Network (WAN). The Company was paid based on the uptime of the system, and the Government used this network to transmit its own administrative data.
Revenue’s Argument:
The department contended that the service facilitated access to the Government’s own database and therefore attracted Service Tax under OIDAR.
The Revenue imposes demand under OIDAR, stating that the Appellant is providing network support, such as establishing WAN, VAN, and LAN, which indicates that the service is provided to enable the Government to access the database.
Appellant’s Stand:
The Company argued that:
- The data belonged to the Government;
- The Company merely provided network infrastructure;
- It did not own or supply any data or information.
Tribunal’s Finding:
The Tribunal held that:
- The ownership of data lies with the Government;
- The assessee merely facilitated data transmission;
- Provision of a private network does not amount to OIDAR services;
- Data ownership is a relevant factor in determining whether a service is classifiable under OIDAR.
Thus, the service was not considered OIDAR.
Key Findings:
- The data was owned by the Andhra Pradesh Government, not United Telecom.
- The network infrastructure was built and maintained by the assessee on a BOT (Build-Operate-Transfer) model.
- The assessee did not control, generate, or provide data, but merely enabled its transmission.
Tribunal’s Conclusion:
“Ownership of data is a very relevant factor. The appellant was only responsible for uptime of the equipment, not for data access or delivery. Hence, the service was not OIDAR.”
This decision emphasized substance over form—a technological network service is not equivalent to providing information or database access if the content originates from the recipient.
Conflicting Ruling: British Airways Case
In British Airways v. CST, the Delhi Tribunal reached a contrary view, holding that services provided by foreign CRS (Computer Reservation System) companies to the airline amounted to OIDAR, even though the data originated from British Airways.
The Tribunal took a literal interpretation, holding that the law does not explicitly require the data to belong to the service provider.
Decision by Larger Bench: Air India Ltd.
Faced with this divergence, the matter was referred to a Larger Bench in Air India Ltd. v. CST, Delhi. The case facts were materially similar:
- Air India engaged foreign CRS companies to enable travel agents to book tickets using Air India’s own flight data;
- The CRS infrastructure converted this into a standard format, relayed it to agents, and reported back bookings;
- Air India paid fees per booking, not for information access.
Larger Bench Observations:
- Ownership of Data is Paramount
The Bench underscored that OIDAR presupposes the provision of data that the service recipient does not already possess. Since the data regarding Air India’s flight schedules, fares, and availability originated from Air India itself, and the CRS merely processed and displayed this to travel agents, no new data was provided to Air India.
- “Providing” Implies Transfer of Something Not Previously Available
Relying on multiple legal dictionaries, the Tribunal held that the word “providing” entails supplying something that is previously unavailable to the recipient. Hence, mere re-transmission or relaying of existing data does not meet this test.
- Substance of Transaction Determines Taxability
The Tribunal looked beyond form to analyze the actual commercial intent behind the CRS agreements. The core object was to:
- Enable ticket booking through travel agents globally;
- Use CRS infrastructure and technology, not their data;
- Make payments per successful booking, not for data access.
Thus, the transaction was for facilitation and outreach, not OIDAR.
Ruling:
“Services provided by CRS companies are not taxable under OIDAR. The ruling in United Telecom lays down the correct law.”
Judicial Principle Established
The Larger Bench decisively established:
- Ownership and origination of data are central to determining whether OIDAR is provided.
- Mere technological enablement or infrastructure support is not OIDAR.
- The intent and commercial substance of the contract must be examined.
Conclusion
The ownership of data is not just relevant—but crucial—in determining whether a particular digital or cross-border technological service qualifies as OIDAR. The Larger Bench in Air India Ltd., has overruled British Airways and affirmed United Telecom decision.
This judgment is a valuable guidepost for all businesses engaged in digital cross-border operations, helping them structure contracts, manage compliance, and defend themselves in audits and litigation.
It is noteworthy that the GST Act provides an expansive meaning to OIDAR services that inter alia includes the supply of advertisement services, cloud services, and providing data or information through a computer network. The above judgment is likely to have a significant bearing under the GST regime as well, particularly because the expression “providing data or information” has been similarly worded and interpreted under both the GST Act and the Finance Act.
The views expressed are the personal views of the author. Any suggestions or feedback can be shared to simran@hnaindia.com.
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