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2015 (1) TMI 954 - AT - Service TaxWaiver of pre deposit - Technical testing and analysis service - Misdeclaration of services - Held that - Following decision of M/s. BA Research India Ltd. Versus CST Ahmedabad 2010 (5) TMI 89 - CESTAT, AHMEDABAD - Stay granted.
Issues:
Service tax liability on services provided to clients located abroad. Analysis: The judgment deals with the issue of service tax liability concerning services provided by the appellants to clients located abroad. The appellants were paying service tax for services rendered to domestic clients but had not discharged the service tax liability for services provided to clients abroad. The authorities alleged that the appellants deliberately evaded service tax by misdeclaring services provided to foreign clients, leading to the initiation of proceedings resulting in a demand for service tax of Rs. 52,05,686/- along with interest and penalties. The appellants argued that they were engaged in the trial of new generic drugs, conducting testing and analysis to ensure the quality of the manufactured product met the reference drug's standards. They provided services to foreign clients, receiving consideration in foreign convertible currency. The appellants relied on a previous decision in the case of M/s. B. A. Research India Ltd., where the Tribunal held that the performance of testing and analysis services was not complete until the reports were delivered to clients abroad. The delivery of the report to the client outside India was deemed an essential part of the service, making it taxable as partly performed outside India. Based on this precedent, the appellants contended that they satisfied the conditions for exemption under Notification No. 11/2007-S.T. dated 1.3.2007, thus establishing a prima facie case on merits. The Tribunal found the appellant's reliance on the cited decision appropriate, indicating that the decision was applicable to the facts of the present case. Consequently, the Tribunal waived the requirement of pre-deposit and granted a stay against the recovery of dues during the pendency of the appeal. The operative portion of the order was pronounced in open court, reflecting the Tribunal's decision in favor of the appellant based on the interpretation of relevant legal provisions and precedents.
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