2023 (1) TMI 345 - AT - Service Tax

Levy of Service Tax - technical testing and analysis service - whether the charges recovered on account of storage beyond period of 3 months can be considered as part of the provision of technical testing and analysis service? - HELD THAT - It is not in dispute that the appellant are providing the service of technical testing and analysis service. It is also not in dispute that the storage charges are collected by the appellant only in cases of storage beyond the period of three months which is included in the technical testing and analysis services already provided by the appellant - On perusal, the article 10 clearly indicates that the service of storage after the period of three months is purely optional and independent service. It can by no stretch of imagination be called technical testing and analysis service. The impugned order observes that the service of storage and technical testing are not mutually exclusive service. We do not agree with this contention and the Article 10 clearly prescribed that only at the request of client the service of storage beyond period of 3 months provided. The agreement also provides separate and independent charges for the purpose of storage. In this background we do not find any merit in the argument that the charges recovered on account of storage beyond period of 3 months can be considered as part of the provision of technical testing and analysis service. The demand therefore cannot be sustained. Appeal allowed.

Summary

Issues:
- Demand of service tax on storage charges collected by M/s BA Research from their clients.

Analysis:
The appeal filed by M/s BA Research against the demand of service tax on storage charges was considered by the Appellate Tribunal CESTAT AHMEDABAD. The appellant provides technical testing and analysis services to clients, and in some cases, stores relevant samples for a certain period on charges. The charges for storage after the initial 3-month period are separate from the technical testing fee. The master service agreement specifies that storage after the testing period is optional and at the client's request. The Tribunal noted that storage charges are collected only for storage beyond the initial 3 months included in the technical testing services. The impugned order's Article 10 clarifies that storage after 3 months is an independent and optional service, distinct from technical testing and analysis. The Tribunal disagreed with the contention that storage and technical testing are not mutually exclusive, emphasizing that storage charges beyond 3 months are separate and independent. Therefore, the charges for storage beyond the initial period cannot be considered part of technical testing and analysis services, leading to the appeal being allowed and the demand for service tax on storage charges being set aside. The judgment was pronounced on 22.12.2022.