2024 (10) TMI 1067 - AT - Service Tax

Refund of service tax - whether the appellant is liable to pay service tax on the service of clinical trial on drugs for the foreign service recipient? - whether the service is export service or otherwise and liable to service tax? - HELD THAT - The issue is no longer res-integra as the same issue in the appellant s own case vide Final Order No. 11772/2024 dated 14.08.2024 2024 (8) TMI 1333 - CESTAT AHMEDABAD has been decided considering various precedent judgments, in their favour that the service of clinical trial provided on the drugs supplied by the foreign service recipient is export of service and is not taxable, therefore the activity in the present case is not liable to service tax. Therefore, the demand in the present assessee s appeals is not sustainable. The Revenue has sought to reject the refund claims on the same ground that service is not export of service. Since this Tribunal has already taken a view that the very same service is export of service therefore, Revenue s appeals are not sustainable hence the same are liable to be dismissed. Assessee s appeals are allowed.

Summary

Issues Involved:
1. Whether the appellant is liable to pay service tax on the service of clinical trials on drugs for foreign service recipients.
2. Whether the services provided qualify as export services and are exempt from service tax.
3. Whether the refund claims of service tax paid under protest should be sanctioned.

Issue-wise Detailed Analysis:

1. Liability to Pay Service Tax on Clinical Trials for Foreign Recipients:
The primary issue was whether the appellant was liable to pay service tax on clinical trial services provided to foreign clients. The Tribunal found that the clinical trial services conducted by the appellant, involving drugs supplied by foreign service recipients, did not fall under the scope of taxable services within India. The Tribunal highlighted that the service of 'Technical Testing & Analysis' was performed on the blood samples of volunteers and not on the samples supplied by the service recipient. The performance of the service culminated in the delivery of reports to clients located outside India, thus completing the service outside the taxable territory.

2. Qualification as Export Services:
The Tribunal examined whether the services provided qualified as export services. It was determined that the services did indeed qualify as export services under Rule 3 of the Place of Provision of Services (POPS) Rules, 2012. The Tribunal noted that the place of supply was the location of the service recipient, which in this case was outside India. This classification was supported by Rule 6A of the Service Tax Rules, 1994, which outlines the conditions for services to be considered as exports. The Tribunal relied on previous judgments, including the appellant's own case, which had established that similar services were treated as exports and were not subject to service tax.

3. Refund Claims of Service Tax Paid Under Protest:
The Tribunal also addressed the issue of refund claims for service tax paid under protest by the appellant. It was argued by the Revenue that the services were not export services and thus not eligible for a refund. However, the Tribunal, referencing its earlier determination that the services were indeed export services, concluded that the appellant was entitled to a refund of the service tax paid. The Tribunal dismissed the Revenue's appeals against the refund claims, affirming that the services provided by the appellant were not taxable and thus eligible for refunds.

Conclusion:
The Tribunal concluded that the clinical trial services provided by the appellant to foreign service recipients qualified as export services and were not liable to service tax. Consequently, the demands for service tax in the assessee's appeals were not sustainable, and the refund claims of service tax paid under protest were valid. The Tribunal allowed the assessee's appeals with consequential relief and dismissed the Revenue's appeals. This judgment reinforces the principle that services delivered to foreign clients, where the place of supply is outside India, qualify as exports and are exempt from service tax.