2014 (1) TMI 403 - AT - Service Tax

Waiver of pre-deposit of service tax - Technical testing & analysis - Recipient of services from the foreign service provider - Held that - oods were sent outside India for conducting the test of the said product manufactured by them in India. The testing report, on completion of testing, was received by their parent company in France - applicant has a strong case in their favour. Therefore the pre-deposit of service tax, interest and penalty is waived and recovery thereof is stayed during the pendency of the appeal - Stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax, interest, and penalties under technical testing & analysis category based on services received from a foreign service provider.

Analysis:
The applicant filed an application seeking waiver of pre-deposit of service tax amounting to Rs. 1,74,473 along with interest and penalties. The demand was confirmed under the category of technical testing & analysis, asserting that the services were received from a foreign service provider. The Commissioner (Appeals) upheld the demand post 18.4.2006. The applicant contended that the goods were sent abroad for testing, and the testing report was received by their parent company in France. They argued that as per the Taxation of Services Rules, 2006, services provided outside India do not attract service tax liability for the recipient. The applicant relied on a previous Tribunal decision where pre-deposit of dues was waived in similar circumstances.

The Tribunal observed that in the current case, the products were indeed tested outside India, and the testing report was received by the applicant's Head Office in France. Consequently, the Tribunal found that the applicant had a strong case in their favor. Therefore, the Tribunal decided to waive the pre-deposit of service tax, interest, and penalty, and ordered a stay on the recovery during the pendency of the appeal. The Tribunal allowed the stay petition, indicating a favorable outcome for the applicant in light of the service being provided outside India and the recipient not being liable to pay service tax as per the relevant rules.

This judgment highlights the importance of the geographical location of service provision in determining the service tax liability for the recipient. By considering the specific circumstances of the case and the relevant legal provisions, the Tribunal made a decision in favor of the applicant, emphasizing that services provided outside India do not attract service tax liability for the recipient. The reliance on a previous Tribunal decision further strengthened the applicant's case, leading to the waiver of the pre-deposit and a stay on recovery during the appeal process.