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2014 (12) TMI 245 - AT - Service TaxImport of services - Technical Testing and Analysis service - Service performed outside India - Design Service - there is no evidence as to why the payment was made in 2008-09 in respect of the service received in 2004-05. There is no evidence on record by way of agreement or copy of order placed or any other correspondence to prove that the service was performed prior to 1-6-2007. In these circumstances, we find no infirmity in the impugned order, whereby the demand with interest and consequent penalty in respect of Design service - No merit in the appeal filed by the assessee. Taxable service provided from outside India and received in India, shall, in relation to taxable specified in sub-rule (ii) be such services as are performed in India. We find the Technical Testing and Analysis service covered under sub-clause (zzh) of Section 65(105) of the Finance Act, as specified in Rule 3 above. The contention of the assessee is that the entire test was performed outside India. In these circumstances as per the first proviso to Rule 3(ii) for taxable service if it is partly performed in India, it is to be treated as performed in India. We find that there is no allegation in the show cause notice of evidence on record to show that part of the service was performed in India. In view of this we find that as per the provisions of Rule 3 of Import of Service Rules, the Service Tax is not leviable on the Technical testing and analysis. In these circumstances, we find no infirmity in the impugned order whereby the demand in respect of Technical testing and analysis is set aside. - Decided partly in favour of Revenue.
Issues Involved:
1. Service Tax demand on Design services and Technical Testing and Analysis service. 2. Applicability of Rule 3(c) of Import of Service Rules on Technical Testing and Analysis service. 3. Service Tax liability on Design services received before 1-6-2007. 4. Interpretation of Rule 3 of Taxation of Services Rules regarding Technical Testing and Analysis service. Issue 1: Service Tax demand on Design services and Technical Testing and Analysis service The case involved a show cause notice issued to a company for demanding Service Tax on Design services and Technical Testing and Analysis service received from a foreign company. The demand was confirmed by the adjudicating authority, leading to appeals by both the assessee and the Revenue. Issue 2: Applicability of Rule 3(c) of Import of Service Rules on Technical Testing and Analysis service The Commissioner (Appeals) set aside the demand of Service Tax on Technical Testing and Analysis service, stating it was performed outside India and covered under Rule 3(c) of Import of Service Rules. This decision was challenged by both the assessee and the Revenue in their appeals. Issue 3: Service Tax liability on Design services received before 1-6-2007 The assessee contended that Design services were received before 1-6-2007 and relied on Rule 6 of Service Tax Rules, 1994 to argue against the demand. However, the Tribunal found that payments for Design services were made in 2008-09, with no evidence proving the services were performed before 1-6-2007. Consequently, the demand for Design services was upheld. Issue 4: Interpretation of Rule 3 of Taxation of Services Rules regarding Technical Testing and Analysis service Regarding the Technical Testing and Analysis service, the Revenue argued it should be considered as performed in India under Section 66A of the Finance Act, 1994. However, the Tribunal noted that Rule 3 of Import of Service Rules states that if a service is partly performed in India, it shall be treated as performed in India. As there was no evidence of any part of the service being performed in India, the demand for Technical Testing and Analysis service was set aside. In conclusion, the Tribunal dismissed both appeals, upholding the demand for Design services but setting aside the demand for Technical Testing and Analysis service based on the interpretation of relevant rules and lack of evidence of any part of the service being performed in India.
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