2010 (5) TMI 89 - AT - Service Tax

Export of technical testing and analysis - . The demand of service tax stands confirmed by the adjudicating authority on the ground that the clinical report of testing and analysis were conducted entirely in India and the fact that such reports were sent abroad is only a secondary aspect. In as much as the testing and analysis were performed in India and no part of the service was performed outside India, the service cannot be termed as export outside India . Held that The performance of testing and analyzing has no value unless and until it is delivered to its client and the service is to be complete when such report is delivered to its client. Thus, delivery of report to its client is an essential part of the service report was delivered outside India and same was used outside India. This is not the disputed fact. Benefit of export allowed. Conditions of rule 3(2) are satisfied.

Summary

Issues:
1. Service tax liability for clinical trial services conducted in India and abroad.
2. Applicability of Notification No.11/2007-ST dated 01.03.2007 for exemption.
3. Interpretation of Rule 3(1)(2) of the Rules regarding service completion.
4. Previous Tribunal decision on a similar issue between the same parties.

Analysis:
1. The appellant, engaged in clinical trial services, was found liable for service tax by the adjudicating authority as the testing and analysis were conducted entirely in India, leading to the service not qualifying as 'export outside India.' The appellant argued that a previous Tribunal order favored them, where it was held that the delivery of reports to clients outside India constituted taxable service partly performed outside India.

2. The Tribunal referred to the previous decision which highlighted that the delivery of reports outside India was crucial for the completion of the service, satisfying the conditions of Rule 3(2) and making the appellant eligible for exemption under Notification No.11/2007-ST dated 01.03.2007. The Tribunal upheld the earlier decision, rejecting the Revenue's appeal and allowing the appellant's claim for exemption.

3. By following the precedent set by the previous Tribunal order, the current Tribunal allowed the stay petition, set aside the impugned order, and allowed the appeal itself. The issue having been previously decided between the same parties, the Tribunal found in favor of the appellant based on the interpretation of Rule 3(1)(2) and the conditions of the exemption notification.

4. The Tribunal members, Mrs. Archana Wadhwa and Mr. B.S.V. Murthy, pronounced the decision in court, disposing of the stay petition and appeal in favor of the appellant, emphasizing the importance of the delivery of reports outside India in determining the tax liability and exemption eligibility for the clinical trial services provided by the appellant.