Relief To Air India | Data Ownership Key to OIDAR Taxability: CESTAT
The Delhi Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that services received by Air India Ltd. from foreign-based Computer Reservation System (CRS) companies are not taxable under the category of Online Information and Database Access or Retrieval (OIDAR) services.
The bench of Justice Dilip Gupta (President), Binu Tamta (Judicial Member), and P.V. Subba Rao (Technical Member) observed that ownership of data is the decisive factor in determining taxability under OIDAR, by rejecting the Rs. 100+ crore service tax demand raised by the department under the reverse charge mechanism.
The bench stated that the expression “providing data/information” in the context of OIDAR service would mean to supply such data/information which was previously not available to the service recipient. Thus, what is of paramount is the ownership of such data/information intended to be provided. It cannot, therefore, be urged that foreign CRS Companies provided any data/information to the appellant.
The appellant/assessee, Air India (formerly Indian Airlines) had engaged foreign CRS providers such as Amadeus, Galileo, and Abacus to allow global travel agents to book its tickets using Air India’s own flight and fare data. These CRS platforms merely facilitated access to this data for booking purposes.
The Directorate General of Central Excise Intelligence (DGCEI) had issued a show cause notice to Air India alleging that these payments constituted taxable OIDAR services received from abroad and were liable for service tax from 2003 to 2008.
The appellant also submitted that if data/information belongs to the service recipient itself, the service provider cannot render OIDAR service in relation to such data/information. Elaborating this submission, learned counsel pointed out that the expression “providing” data/information would mean to supply such data/information which was previously not available with the service recipient. What has, therefore, been submitted is that an important condition to be covered under OIDAR service is that data/information must be provided, and such provision can be for either access or retrieval or both, but if the data itself belongs to the service recipient then the activity of disseminating such data by the service provider to the service recipient cannot be equated with ‘providing’ of data. It has, therefore, been submitted that it is the ownership over such data or information intended to be provided which is paramount.
The tribunal while overruling previous decisions in British Airways and Jet Airways, the Tribunal held CRS companies did not provide independent data to Air India; rather, they facilitated access to Air India’s own data. Payment to CRS companies was contingent on successful ticket bookings, not for receiving data.
The CESTAT held that the essence of OIDAR taxability lies in whether the service provider “provides” new data to the recipient. In this case, Air India retained full ownership of the data accessed. Mere facilitation or access to one's own data through a computer network does not qualify as OIDAR service.
Case Details
Case Title: Air India Ltd Versus Commissioner (Adjudication) Service Tax
Case No.: Service Tax Appeal No. 52780 Of 2014
Date: 23.06.2025
Counsel For Appellant: B.L. Narasimhan, Shagun Arora and Kunal Aggarwal
Counsel For Respondent: Special Counsel Ajay Jain
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
