2007 (12) TMI 167 - AT - Service Tax

Export of services of testing & inspection - In is un-disputed that the services which are rendered by applicant to foreign party is on the request of such foreign party for testing & inspection of the goods which are to be exported - entire issue requires a detailed consideration and evaluation of the law on the subject - issue has wider ramifications and may arise all over India, hence needs to be addressed urgently by the Tribunal - application for the waiver of the pre-deposit is allowed

Summary

Issues:
Confirmation of demand of Service Tax and penalty, applicability of export of services, time bar on demand, services rendered to foreign party, waiver of pre-deposit.

Confirmation of demand of Service Tax and penalty:
The judgment addresses a stay application against the confirmation of demand of Service Tax and penalty on the appellants. The ld. Counsel argues that the services provided to foreign purchasers for testing and inspection are not taxable as per government statements and circulars. On the other hand, the ld. Jt. CDR contends that the services, although for foreign buyers, are rendered in India, and there is a suppression of value regarding taxable services provided to foreign purchasers. The Tribunal finds the issue requires detailed consideration and evaluation of the law, with wider ramifications across India. Consequently, the application for waiver of pre-deposit is allowed, and the appeal is listed for final hearing.

Applicability of export of services:
The central issue revolves around whether the service tax liability arises for services rendered by the appellant to a foreign party upon the foreign party's request for testing and inspection of goods to be exported. The Tribunal notes that the services are provided to foreign parties based on their request for export-related activities. The Tribunal deems this issue to have significant implications and requires urgent attention, leading to the decision to allow the waiver of pre-deposit and schedule the appeal for final hearing.

Time bar on demand:
The ld. Counsel argues that the entire demand is time-barred as the period in question predates the issuance of the show cause notice. However, the ld. Jt. CDR maintains that there was a suppression of value regarding taxable services provided to foreign purchasers, making the issue of limitation relevant. The Tribunal acknowledges the potential applicability of the time bar in this case but emphasizes the need for a detailed evaluation of the legal aspects involved.

Services rendered to foreign party:
The Tribunal acknowledges that the services provided by the appellant to foreign parties are on the request of those foreign parties for testing and inspection purposes related to export activities. While the ld. Counsel argues that such services should not be taxable based on government statements and circulars, the ld. Jt. CDR contends that the services, despite being for foreign buyers, are rendered in India, raising questions about the tax liability and value suppression.

Waiver of pre-deposit:
After considering the submissions and perusing the records, the Tribunal decides to allow the application for waiver of the pre-deposit of the amounts involved, citing the need for urgent consideration of the issue due to its potential wider implications across India. The Tribunal stays the recovery of the amount until the final hearing, demonstrating a balanced approach to addressing the financial aspects of the case.