2024 (11) TMI 206 - AT - Service Tax

Service tax on the service of Clinical Trial on Drugs for the Foreign Service recipient - whether this service is considered as export of service or otherwise - HELD THAT - As relying on VEEDA CLINICAL RESEARCH LIMITED VERSUS PR. COMMISSIONER, CGST, AHMEDABAD (VICE-VERSA) 2024 (10) TMI 1067 - CESTAT AHMEDABAD Service in question provided to Foreign Service recipient is export of service and accordingly no service tax is recoverable on the same. Assessee appeal allowed.

Summary

Issues Involved:
1. Whether the appellant is liable to pay service tax on the service of Clinical Trial on Drugs for the Foreign Service recipient.
2. Whether such service is considered as export of service or otherwise.

Detailed Analysis:

1. Liability to Pay Service Tax:
The primary issue in this case was whether the appellant was liable to pay service tax on the service of conducting clinical trials on drugs for foreign service recipients. The appellant argued that this issue had already been settled in their favor in previous rulings by the Tribunal, specifically in Final Order No. 11772/2024 and Final Order No. 12278-12283/2024. The Tribunal, upon reviewing the submissions and records, found that the clinical trial services conducted by the appellant on drugs supplied to foreign recipients were excluded from the scope of service tax as they qualified as export of services. The Tribunal reiterated that the service was performed on the blood samples obtained during human trials and not on goods supplied by the recipient, thus not falling under Rule 4 of the Place of Provision of Services (POPS) Rules, 2012, which would otherwise make the service taxable in India.

2. Classification as Export of Service:
The Tribunal examined whether the clinical trial services provided by the appellant qualified as export of services. According to Rule 3 of the POPS Rules, the place of supply is the location of the service recipient. In this case, since the service recipients were located outside India, the place of supply was deemed to be outside India, thus qualifying the service as an export. The Tribunal also referenced Rule 6A of the Service Tax Rules, 1994, which outlines the conditions for a service to be considered an export. The appellant met these conditions, as the service was provided to a recipient outside India, and the payment was received in convertible foreign exchange. The Tribunal cited several precedents, including the cases of Sai Life Sciences Ltd. and Dow Chemical International (P) Limited, which supported the classification of similar services as exports, exempting them from service tax.

Conclusion:
The Tribunal concluded that the services provided by the appellant constituted an export of service and were therefore not liable to service tax. The demand for service tax in the appellant's case was deemed unsustainable, and the appeal was allowed with consequential relief. Similarly, the Revenue's appeals, which sought to deny refunds on the grounds that the service was not an export, were dismissed. The Tribunal's decision aligns with consistent judicial interpretations that emphasize the non-taxability of exported services under the Service Tax framework.