Arguable service tax on testing and inspection services for foreign buyers justified waiver of pre-deposit and stay of recovery.

Testing and inspection services performed in India for foreign buyers were treated as raising an arguable question on service tax liability, including the effect of the Board circular on export of services. The Tribunal noted that the taxability issue required detailed consideration and that the limitation plea was also arguable, so interim protection was justified. Waiver of pre-deposit was granted and recovery was stayed pending disposal of the appeal.

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Issues: Whether waiver of pre-deposit should be granted and recovery stayed pending final disposal of the appeal in view of the arguable taxability of services rendered to foreign purchasers and the plea of limitation.

Analysis: The application raised a disputed question whether testing and inspection services performed in India for foreign buyers were exigible to service tax, with reliance on the Board circular concerning export of services. The order noted that the taxability issue required detailed consideration, that the limitation plea was also arguable, and that the matter involved wider ramifications warranting urgent adjudication. On that basis, the Tribunal found a case for interim protection.

Conclusion: Waiver of pre-deposit was granted and recovery was stayed until disposal of the appeal.

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