2016 (5) TMI 195 - AT - Service Tax

Classification of seafood inspection services - Whether it would fall under Technical Inspection and Certification Services or Technical Testing & Analysis Services of the goods for the period 2007-08 - Held that - from the agreement it is found that the activity of the appellant is not only inspection of the facility and certification of the factory, but also include the result analysis of the seafood which were sampled by the appellant and send for testing. The report submitted by the appellant on the Audit conducted by them also shows that the testing on the various seafoods. In our view, if the inspection of the seafood and analysis thereof as to adherence to the quality as prescribed by M/s JMRI, would fall under the category of Technical Testing & Analysis Services , eligible for exemption granted for Technical Testing & Analysis Services on human beings or animals as there cannot be any doubt that seafood are nothing but a kind of animals. The first appellate authority as well as adjudicating authority miss-construed the purpose of agreement, the said agreement entered by the appellant requires as per complete inspection of the facility including quality of the seafood. Therefore, the impugned order is to the extent it holds that the services rendered by the appellant would fall under the category of Technical Inspection and Certification Services is incorrect and liable to be set aside. Refund claim - Confirmation of demand raised on the erroneously sanctioned refund - Held that - the confirmation of the demand raised of erroneous sanctioned ₹ 1,53,875/- which is in contest in this appeal needs to be set aside and we do so. Further, the contention of the appellant that they are eligible to refund claim of ₹ 1,77,956/- is rejected as it is very clear that the refund claim is beyond the limitation period as provided under Section 11B of Central Excise Act, 1994. It is found that in the case in hand looking at the issue from another angle, the Service Tax liability on the appellant is refundable to him as the goods which are inspection services as provided by the appellant is to a person situated abroad. This ratio is settled by the Hon ble High Court of Bombay in the case of Commissioner of Service Tax, Mumbai-III Versus M/s. SGS India Pvt. Ltd. 2014 (5) TMI 105 - BOMBAY HIGH COURT . The appellant is entitled to refund of the amount which is falls within limitation period. - Refund allowed.

Summary

Issues involved:
Classification of services as Technical Inspection and Certification Services or Technical Testing & Analysis Services; Refund claim filed by the appellant partly allowed and partly rejected; Confirmation of demand raised on erroneously sanctioned refund.

Analysis:
1. Classification of services: The appellant provided seafood inspection services to a company in the USA. The issue was whether the services fell under Technical Inspection and Certification Services or Technical Testing & Analysis Services. The appellant initially paid Service Tax under Technical Inspection and Certification Services but later claimed a refund, arguing that their services should be classified as Technical Testing & Analysis Services exempted for testing related to human beings or animals. The Tribunal examined the agreement and activities performed by the appellant, concluding that the services involved not only inspection and certification but also testing and analysis of seafood. The Tribunal held that since seafood can be considered a kind of animal, the services qualified as Technical Testing & Analysis Services eligible for exemption. The previous order classifying the services as Technical Inspection and Certification Services was set aside.

2. Refund claim and demand confirmation: In the second appeal related to a refund claim, the Tribunal noted that the decision in the first appeal impacted this issue. The erroneous demand confirmation of a specific amount was set aside based on the reclassification of services. The appellant's claim for a refund beyond the limitation period was rejected. However, the Tribunal recognized that the Service Tax liability on the appellant for inspection services provided to a foreign entity could be refundable. Citing a precedent from the Bombay High Court, the Tribunal allowed a refund within the limitation period. The second appeal was disposed of accordingly, considering the reclassified nature of the services.

3. Overall Disposition: The Tribunal disposed of both appeals in favor of the appellant. The first appeal addressed the reclassification of services from Technical Inspection and Certification Services to Technical Testing & Analysis Services. The second appeal dealt with the refund claim and demand confirmation, with the Tribunal allowing a refund within the limitation period based on the reclassification of services. The judgments were pronounced in open court, concluding the legal proceedings satisfactorily for the appellant.