2014 (11) TMI 696 - AT - Service Tax

Waiver of pre deposit - Export of services or not - Technical Testing and Analysis Services - Proof of export - submissions made by learned counsel that they did not file Shipping Bills while sending samples is relevant and therefore, they could not have made a submission that they had exported since the question of procedure would arise. - Held that - It is not the case of the department that neither any evidence has been provided nor any evidence brought before us during hearing to show that the appellant has not used the imported / indigenous materials for their activity of technical testing and analyzing and resulting any export of service. In terms of Board s Circular dated 29.2.2008 read with Notification No. 5/2008-S.T. dated 1.3.2008, special provisions for three services were created and one of them was in respect of TTA services. If these services are provided from India in relation to any goods or material or any immovable property, it has to be treated as service performed outside India. In this case, the appellant was providing structure of biochemical compound which was developed in India and a minute quantity was exported and therefore, it was submitted that this Circular is applicable. - prima facie case is in favor of assessee - Stay granted.

Summary

Issues Involved:
- Eligibility for exemption under Notification No. 52/2003-Cus and 22/2003-C.E.
- Compliance with Rule 3 of the Export Service Rules, 2005 for exported services.
- Limitation on show cause notice for customs and excise duties.

Eligibility for Exemption under Notification No. 52/2003-Cus and 22/2003-C.E.:
The appellants, engaged in providing Technical Testing and Analysis Services, faced demands for customs and central excise duties along with penalties for misusing notifications. The issue revolved around whether the appellants qualified for the exemption under the said notifications by exporting services as required. The services provided were analyzed to determine if they met the conditions set forth in the notifications, including the location of the service receiver and payment received in convertible foreign exchange.

Compliance with Rule 3 of the Export Service Rules, 2005:
The focus was on whether the services exported by the appellants satisfied the conditions outlined in Rule 3 of the Export of Services Rules, 2005. The nature of the Technical Testing and Analysis Services provided, the location of the service receiver outside India, and the receipt of payment in convertible foreign exchange were crucial factors in determining compliance with the rule. The appellants' activities, including filing of returns and reports, were scrutinized to assess their adherence to the export service rules.

Limitation on Show Cause Notice for Customs and Excise Duties:
The question arose regarding the limitation on the show cause notice and demand for customs and excise duties on imported capital goods/inputs. The appellants argued that their regular filing of ST-3 returns and ER-2 returns indicated compliance with jurisdictional tax authorities, potentially impacting the imposition of duties and penalties. The timeline of events and the procedural aspects of filing returns were considered to evaluate the applicability of the limitation on the demands made.

The judgment delved into the statutory provisions, changes in rules over time, and the implications on the services provided by the appellants. The Commissioner's observations highlighted the categorization of services for export purposes and the specific conditions to be met for service export classification. The analysis of the service activities, including the location of performance and receipt of payment, played a vital role in determining the eligibility for exemption and compliance with export service rules.

The judgment acknowledged the submissions made by the appellants' counsel regarding the export of services, the applicability of circulars and notifications, and relevant legal precedents. The discussions referenced specific cases to support the appellants' position on eligibility for the benefit of exemption notification. Consequently, the requirement of pre-deposit of adjudged dues was waived, and a stay against recovery was granted for a specified period, reflecting the favorable outcome for the appellants based on the presented arguments and legal interpretations.