National Internet Exchange Of India Vs C.S.T. (CESTAT Delhi)
The moot question for adjudication in the present case appears to be as to whether the registrar accreditation agreement is a mere agreement between the appellant and its registrar for accreditation or it actually is in agreement for rendering franchise services by the appellant to its registrars.
Appellant and its registrars have their separately assigned roles. Registrar are accredited for discharging such particular functions of the appellant for which they are accredited by the appellant. Otherwise also, in today“s world of international connectivity, database of all domain name is required to be maintained. There is a need to link a particular domain name with the particular computer and the internet protocol. What is also apparent from the above discussed agreement is that the registrars are the entities which contract with the registered name holders and the registry and collects registration data about registry name holders and submit the same to the registry for entering in the database maintained by the registry. It becomes abundantly clear that both registry and registrars are independent entities operating on principle-to-principle basis.
In view of the entire above discussion, we have no hesitation in holding that the original Adjudicating Authority has miserably erred while holding an arrangement of accreditation as that of providing franchisee services. The levy confirmed vide the Order under challenge is therefore set aside.
FULL TEXT OF THE CESTAT JUDGMENT
The present is an Appeal against the Order-in-Original No. 150-GB-2013 dated 28/10/2013 vide which a demand of Rs. 6,54,79,758/- has been confirmed alongwith the penalty of same amount under Section 78 of the Act and an additional penalty under Section 77 of the Act.
2. The facts relevant for the purpose are that M/s National Internet Exchange of India (NIXI for short) is a not for profit company registered under Section 27 of the Companies Act, 1957 and is engaged in Domain Name Business in India i.e. for providing efficient interconnectivity of internet in India and for setting up of internet domain name operations and related activities. For the purpose the appellant has been entrusted by the Department of Information and Technology under the Ministry of Communication and IT, Government of India vide its policy framework dated 28.10.2004, with the responsibility of setting up the registry for “.in“country got top level domain name (TLD) and for operating as registry for “.in“domain name in India. There is an office order also in this respect dated 20.11.2014. However, the Department on the basis of intelligence gathered alleged that the appellants while appointing registrars to register the domain names were collecting charges per domain name registered by the said accredited registrar per year as registration charges, transfer charges, renewal charges, etc. in lieu of services rendered to these registrars. The said services are alleged to be the franchise services taxable w.e.f. 16.06.2005. Resultantly, the Show Cause Notice dated 14.10.2010 was served upon the appellants. The demand as raised in the Show Cause Notice has been confirmed vide the impugned order under challenge. Hence, the present Appeal.
3. We have heard Shri B.L. Narasimhan and Ms. Shagun Arora, Ld. Advocates for the appellants and Shri Amresh Jain, DR for the Department.
4. It is submitted on behalf of appellant that NIXI is an internet registry for India like ICANN is the registry at international level. The Ministry of Communication under the policy framework had given a very specific task to the appellant i.e. to build an infrastructure for “.in“registry and operating the same and also to examine upon an appraisal in this respect as to whether they have the requisite expertise and sufficient degree of training to allot domain names and upon being satisfied assign them as the role of registrars relating to registration of domain names. It is impressed upon that the registry i.e. appellant and their accredited registrars are two different entities as is very much clear from the registry accreditation agreement entered into between the two. It is further submitted that a sum of Rs. 50,000/- as received by the appellant from its registrars is again under the mandate of policy framework of Government of India to receive the same as accreditation fee. No services in lieu of said amount are being provided by the appellant to the registrars. The findings of the Adjudicating Authority below are alleged to be wrong in this context. Penalties are also impressed upon to have been wrongly levied upon. Order is prayed to be set aside and Appeal is prayed to be allowed. The following case laws are relied upon:
