Service Tax Exemption for Testing Services to Job Workers & Sister Concerns Abroad

The Tribunal ruled that no service tax was chargeable on testing services provided to job workers as no service was provided to them. For testing services provided to sister concerns abroad, no service tax was applicable until 14/03/05 under Notification No. 21/2003-ST, and from 15/03/05 onwards, the services were considered export of service under the Export of Service Rules, 2005. The Tribunal dismissed Revenue's appeals, affirming the legality of the impugned order, concluding that no service tax was chargeable based on the circumstances and legal provisions during the relevant periods.

---

---

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.

---