2014 (4) TMI 725 - AT - Service Tax

Waiver of pre-deposit - services provided by clinical research organizations - Exemption under Notification Nos.11/2007-ST and No.83/2011 - export of services - Held that - In the impugned order, the adjudicating authority failed to analyze or discuss the first claim of the petitioner for exemption, based on the exempted Notification. In respect of the second claim, based on provisions of the Export of Service Rules, 2005, the adjudicating authority rejected the same on the ground that the whole of the services were not provided within the territory of India - waiver of pre-deposit in full and stay all further proceedings pursuant to order impugned pending disposal of the appeal - Stay granted.

Summary

Issues: Application for waiver of pre-deposit and stay based on adjudication order regarding service tax liability, exemption claims under Notification Nos. 11/2007-ST and No. 83/2011, entitlement to benefit under Export of Service Rules 2005, and analysis of the adjudicating authority's conclusions.

In this case, the application sought waiver of pre-deposit and stay following an adjudication order determining a substantial service tax liability for the appellant. The liability arose from two show cause notices covering the period 2007 to 2011, with interest, and penalties levied under Sections 75, 76, and 78 of the Finance Act 1994. The appellant, providing taxable service of "technical testing and analysis," claimed exemption based on Notification Nos. 11/2007-ST and No. 83/2011 issued by the Central Government. These notifications exempted services provided by approved clinical research organizations conducting trials related to testing newly developed drugs on human participants. Additionally, the appellant argued for benefits under Section 3 of the Export of Service Rules, 2005, as the research results were provided to an overseas company. The adjudicating authority failed to analyze the exemption claim but rejected the export of service benefit, citing services not wholly provided within India.

The Tribunal found the adjudicating authority's conclusions erroneous on both exemption and export of service benefit aspects. Citing precedents such as M/s. B.A Research India Limited and decisions from the Tribunal, the appellant's entitlement to exemption and benefits under the Export of Service Rules 2005 appeared prima facie valid. Consequently, the Tribunal granted full waiver of pre-deposit and stayed further proceedings pending appeal disposal, based on the favorable analysis of the exemption and export of service rules issues. The stay application was thus disposed of in favor of the appellant.