Export of service principle confirmed for analysis and reporting work supplied to foreign clients abroad

Services of analysis, advising and reporting performed in India for foreign clients, with payment received in convertible foreign exchange, were treated as export of service because the recipient was outside India and the benefit accrued abroad. Applying the principle that service tax is a destination-based consumption tax leviable only on services provided within the country, the court followed its earlier view in SGS India Private Limited and held that such services fall outside service tax net. No service tax was payable on these services.

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Issues: Whether services of analysis, advising and reporting performed in India but supplied to foreign clients abroad and paid for in convertible foreign exchange qualified as export of service so as to exclude service tax liability.

Analysis: The service recipient was located outside India and the benefit of the services accrued to the foreign client. The Tribunal's view was consistent with the earlier decision of the same Court in SGS India Private Limited, which treated testing and analysis completed by delivery of reports to foreign clients as export of service. The governing principle applied was that service tax is a destination-based consumption tax and is leviable only on services provided within the country. On those facts, the services were held to have been exported.

Conclusion: The services constituted export of service and no service tax was payable on them.

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