2015 (3) TMI 1107 - AT - Service Tax

CESTAT Bangalore Rules in Favor of Appellant in Export of Services Tax Case

The Appellate Tribunal CESTAT Bangalore allowed the appellant's appeal, ruling in favor of the appellant in a case concerning the export of services for ... Demand of service tax - Research and development services - Export of service - Held that:- It is quite clear that the issue is covered by the precedent decisions of this Tribunal. Moreover in this case even though quality tests were conducted in India, only after the report is accepted by the clients abroad, service gets completed. In the case of B.A. Research India Ltd. the Tribunal had taken a view that this amounts to part performance in abroad and part performance in India and in such cases according to definition of Export of Service Rules, this has to be considered as export - Decided in favour of assessee. Issues:1. Whether the services rendered by the appellant constitute export of services for tax purposes.2. Whether the demand for service tax, interest, and penalty imposed on the appellant is justified.3. Whether the issue is settled by precedent decisions of the Tribunal.Analysis:1. The appellant, engaged in research and development activities for a US-based biopharmaceutical company, entered into a Master Service Agreement to provide various services. The authorities initiated proceedings against the appellant, claiming that the services were entirely performed in India and not amounting to export. A substantial demand for service tax, interest, and penalty was made. However, the appellant contended that the services were partly performed abroad when the report was accepted by clients overseas, as per the terms of the agreement.2. The demand for service tax, interest, and penalty was challenged by the appellant, citing relevant legal precedents. The appellant referred to past decisions, including CST, Ahmedabad vs. B.A. Research India Ltd., where it was held that part performance abroad and part performance in India constitutes export of services. The appellant also highlighted other cases supporting their position. The Revenue accepted that the issue was covered by the Tribunal's decision in the B.A. Research India Ltd. case.3. Upon reviewing the facts, submissions, and precedent decisions, the Tribunal found that the issue was settled by previous judgments. Notably, when quality tests were conducted in India but the service was completed only upon acceptance by clients abroad, it was considered as part performance abroad, leading to the conclusion of export of services. Therefore, the appeal was allowed, providing consequential relief to the appellant. The Tribunal's decision was based on the interpretation of the Export of Service Rules and the specific circumstances of the case.This detailed analysis of the judgment in the case before the Appellate Tribunal CESTAT Bangalore highlights the key legal issues, arguments presented, relevant precedents cited, and the final decision rendered by the Tribunal.