2014 (6) TMI 766 - AT - Service Tax

Demand of service tax - Technical testing and analysis service - testing of the samples received from job workers who are manufacturing the goods for the respondent on job work basis and the samples received from their sister concerns abroad for testing - Held that - As regards the testing of the samples received from the job workers, these samples are from the goods which were being manufactured by the job workers for the respondent on job work basis and there is nothing on record to show that the respondent had charged any amount for testing the samples from the job workers. Therefore, we agree with the findings of the Commissioner (Appeals) that the respondent have tested their own goods and, as such, have not provided any service to the job workers and, hence, no service tax would be chargeable. Even in the grounds of appeal in the Revenue s appeal, it is not mentioned as to whether the respondent had charged any amount from the job workers for testing of the samples and if so, how much amount had been charged. - Decided against Revenue.

Summary

Issues:
1. Whether service tax is chargeable on testing services provided by the respondent to job workers and sister concerns abroad.
2. Whether the exemption Notification No. 21/2003-ST applies to testing services provided to sister concerns abroad.
3. Whether the Export of Service Rules, 2005 exempt the testing services provided to sister concerns abroad.
4. Whether service tax is chargeable on testing services provided to job workers manufacturing goods for the respondent.

Analysis:

Issue 1: The Tribunal found that no service tax would be chargeable on the testing of samples received from job workers as the respondent had tested their own goods without charging any amount from the job workers. Therefore, no service was provided to the job workers, and hence no service tax was applicable.

Issue 2 & 3: Regarding testing services provided to sister concerns abroad, the Tribunal noted that payment for conducting the tests had been received in convertible foreign exchange without any repatriation from or outside India. Thus, until 14/03/05, no service tax was chargeable under exemption Notification No. 21/2003-ST. From 15/03/05 onwards, the services were considered as export of service under the Export of Service Rules, 2005, as the tests were performed in India but the reports were delivered outside India, meeting the export criteria.

Issue 4: The Tribunal held that the impugned order did not contain any mention of how the services provided to sister concerns abroad were not exempt from service tax under Notification No. 21/2003-ST until 15/03/05, or how no service tax would be payable from 15/03/05 onwards. As a result, the Tribunal dismissed the Revenue's appeals, affirming the legality and propriety of the impugned order.

In conclusion, the Tribunal upheld the decision that no service tax was chargeable on the testing services provided to job workers and sister concerns abroad based on the specific circumstances and legal provisions applicable during the relevant periods.