Custom, Excise & Service Tax Tribunal
Vimta Labs Ltd vs Commissioner Of Central ... on 30 September, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 21848 / 2014 Appeal(s) Involved: ST/2181/2012-DB [Arising out of OIO No.14-2012 dated 21/06/2012 passed by CC,CE&ST, Hyderabad-III ] VIMTA LABS LTD PLOTS NO. 141/2 & 142, PHASE- II, I.D.A, CHERLAPALLY, R.R DIST, HYDERABAD Appellant(s) Versus Commissioner of Central Excise,Customs And Service Tax HYDERABAD-III NULL OPP LB STADIUM ROAD, BASHEERBAGH, HYDERABAD, - 500004 ANDHRA PRADESH Respondent(s)
Appearance:
Shri NARAYANA SWAMY NAIDU M., Advocate 7-1-414/37,SRINIVASA COLONY EAST, S.R. NAGAR HYDERABAD. - 500038 A.P For the Appellant Dr. A.K. Nigam, Addl. Commissioner(AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 10/09/2014 Date of Decision: 30/09/2014 Order Per : B.S.V.MURTHY The disputed issue relates to services of testing and analysis of sample drugs received from the appellants foreign clients. These services fall under the category of technical testing and analysis services covered under sub-clause (zzh) of Section 65(105) of the Finance Act, 1994. The period of dispute and the relevant impugned order is mentioned below:-
No. and date of the order Period Amount of service tax under dispute OIO No.14/2012-Hyd-III Adjn. (ST)-COMMNR dt. 21/6/2012 2010-11 Rs.3,01,67,620/-
Besides service tax, interest and penalties have also been demanded.
2. The learned counsel submits that the services provided constitute export of services as per Rule 3(1)(ii) of the Export of Service Rules, 2005, as the results of testing and analysis of the sample drugs are provided to the clients abroad and the considerations for the services are received in convertible foreign currency. Delivery of test reports to the clients outside India and used outside India amounts to part performance of taxable service outside India and accordingly the services are export of services. He also submits that the ratio of the decisions in the following cases are squarely applicable to the appellants case.
CST, Ahmedabad Vs. B.A. Research India Ltd. [2010(18) STR 439 (Tri. Ahmd.)] Lotus Lab P. Ltd. Vs. CST, Bangalore [Stay Order No.1018/2011 dt. 01/11/2011- Tri. Bang.] In view of the above, he submits that the appeal may be allowed with consequential relief, if any, to the appellants.
3. On going through the decisions cited by the learned counsel in the case of BA Research India Ltd.(supra), we notice that the facts are similar and this Tribunal had taken a view in favour of the appellants. Paragraph 9 & 10 are relevant and are reproduced below:-
9.?The issue before us is whether the service conducting clinical trials provided by the respondents are taxable service under the category of technical testing and analysis as defined under the Act. In the instant case the respondent has shown as the service provided to their foreign clients as export of service to know the provisions of the export of service which are reproduced here as under :
Export of Services Rules, 2005
3.?Export of taxable service.-
(i)?Export of taxable service shall, in relation to taxable services,- .
(ii)?specified in sub-clauses (a),......(zzh), (zzi),..... and (zzzp) of clause (105) of Section 65 of the Act, be provision of such services as are performed outside India :
Provided that where such taxable service is partly performed outside India, it shall be treated as performed outside India; (2)?The provision of any taxable service [specified in sub-rule (1)]* shall be treated as export of service when the following conditions are satisfied, namely:-
(a) such service is delivered outside [provided from]* India and used outside India; and
(b) payment for such service [provided outside India]* is received by the service provider in convertible foreign exchange.
*[added or substituted w.e.f. 1-3-2007] #{deleted w.e.f. 1-6-2007}
8.?Reading of the above provisions of Export of Services Rules, 2005 (hereinafter referred to as the Rules) makes it amply clear that the taxable service specified in sub-clause (zzh) of Clause (105) of Section 65 of the Act is covered under Rule 3(1)(ii) of the Rules. The performance is not complete until the testing and analysis report is delivered to the client. In the present case, when such reports were delivered to the clients outside India, it amounts to taxable service partly performed outside India. The performance of the taxable service has no validity/sanctity unless its report is submitted to the service receiver/client. The clients do not have any value for merely performance if no report is delivered to them. Consideration of the service is received by the appellants only when they deliver the study report and the certificate of the testing and analysis of the clinical trials conducted by them. Thus, delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. These facts also fortify the views taken hereinabove that the service provided by the appellants was export of service and I am inclined to them such taxable service as export of service and therefore not taxable.
10.?From the above provision it is clear that the said services came under Rule 3(1)(2) (sic) of the Rules. It is very much clear that the performance of the service is not complete until the testing and analysis report is delivered to its client. In the present case, when such reports were delivered to the clients outside India it amounts to taxable service partly performed outside India. The performance of testing and analysing 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. We hold that the respondent satisfied the conditions of Rule 3(2) and accordingly the respondents are eligible for the exemption under Notification No. 11/2007-S.T. dated 1-3-2007. We do not find any force in the argument made by the learned DR. With this observation, the impugned order is upheld and the appeal filed by the Revenue is rejected. Stay petition is also disposed off accordingly.
4. Since the issue is squarely covered by the precedent decision of the Tribunal, we consider that the same is applicable to the present case also and accordingly the appeal is allowed with consequential relief, if any, to the appellant.
(Operative portion of the order has been pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Raja 4