2014 (2) TMI 296 - AT - Service Tax

Export of service or not - Whether the Technical Testing and Analysis Service and resultant report sent abroad can be considered as export of service or not Denial of exemption Notification No. 52/2003-Cus and Notification No. 22/2003-CE - Export of Service Waiver of Pre-deposit - Held that - The appellants receive chemicals and materials from their parent-company, conduct testing and analysis on the same and send the report electronically to the parent-company - the parent-company receives such chemicals from various clients and sends it to the appellant and ultimately the test reports are given to the service receivers - Prima facie, unless a service receiver receives the test reports, it cannot be said that the activity of provision of service is complete - The activity is complete only when the report is sent, received by the service receiver and further action if necessary is taken by them - the appellant has been able to show a strong prima facie case in their favour and have been able to show that the service rendered by them has to be treated as an activity of export of service Pre-deposits waived till the disposal Stay granted.

Summary

Issues:
1. Whether the 'Technical Testing and Analysis' Service provided by the appellant can be considered as export of service or not.

Analysis:
The Appellant, a 100% EOU engaged in providing 'Technical Testing and Analysis' Service, was discharging service tax liability regularly. However, authorities initiated proceedings denying duty-free benefits, asserting that the services provided did not qualify as export of service. The impugned order confirmed central excise duty demand, penalty, and interest. The key issue was whether the service provided by the appellant, along with the resultant report sent abroad, could be deemed as export of service. The Appellant's counsel argued that the service was exportable, citing positive net foreign exchange, voluntary service tax payment, and compliance with Export of Service Rules. The Respondent contended that the entire activity was conducted in India, with only the report being sent abroad, thus not meeting export criteria.

The Tribunal analyzed the submissions and relevant rules. It noted that the service was covered by Export of Service Rules 2005, requiring part performance outside India and consideration in foreign currency. Relying on a precedent involving similar facts, the Tribunal found that sending the report abroad completed the service provision. The appellant received materials, conducted tests, and sent reports electronically to the parent-company, indicating an integral part of the service was performed outside India. The Tribunal emphasized that service completion occurred upon report receipt by the service receiver. As the appellant demonstrated a strong case for export of service, the Tribunal granted a complete waiver of pre-deposit and stay against recovery during the appeal's pendency.

In conclusion, the Tribunal ruled in favor of the Appellant, recognizing the 'Technical Testing and Analysis' Service as an export of service based on the criteria established under the Export of Service Rules. The decision highlighted the importance of service completion, particularly the transmission of test reports, in determining the export nature of the service provided.