CESTAT Rules Matrimonial Services Before July 2012 Not Classifiable as OIDAR but as Composite Services Exempt from Service Tax [Read Order]
CESTAT held that matrimonial services before July 2012 were composite in nature and exempt from service tax, rejecting their classification as OIDAR.
Matrimonial Services - taxscan
Matrimonial Services - taxscan
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that matrimonial services provided before July 2012 could not be classified as Online Information and Database Access or Retrieval (OIDAR) services but had to be treated as composite services, exempt from service tax.
KM Wedding Events Management Pvt. Ltd., formerly KM Matrimony Pvt. Ltd., offered matchmaking services through different packages, including print advertisements, web access to profiles, and personalised consultancy. The department classified the web-based components as OIDAR and demanded service tax for the period April 2009 to June 2012.
For the period after July 2012, the same services were treated as matrimonial services and taxed in full. The department also invoked the extended limitation period to raise demands covering 2009 to 2017.
The appellant’s counsel argued that their primary service was matchmaking, carried out mainly through print advertisements which were exempt from service tax until July 2012. They argued that the department could not split a composite service into parts and selectively classify the web access portion as OIDAR before July 2012 while treating the same bundle as matrimonial services later.
They also pointed out that they had disclosed details of tax liabilities through letters sent in January 2013, so extended limitation on grounds of suppression could not apply.
The revenue counsel defended the classification under OIDAR and explained that non-filing and late filing of ST-3 returns justified invoking the extended limitation. They relied on case law to argue that suppression was established and that demands were valid.
The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that matrimonial services were composite, combining print, OIDAR, and consultancy.
They observed that vivisection of composite services was not permissible, and the essential character of the service was matrimonial. The tribunal further observed that the investigation itself was triggered by the appellant’s letters and the demand was based on their own records, showing no suppression.
The tribunal explained that demands raised based on extended limitation could not survive. However, it sustained tax for the normal period amounting to Rs. 66.79 lakh for July 2012 to March 2013 and Rs. 2.95 lakh for mandap keeper services, confirming a total of Rs. 69.75 lakh with interest. All penalties were vacated, and the appeal was partly allowed.
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