Export of services for testing and analysis accepted where reports were delivered abroad, securing exemption from service tax and penalty.

Clinical trial, testing and analysis services were treated as export of services because the service was completed only on delivery of the report to clients outside India, and the report was also used outside India. On that basis, the services were regarded as partly performed outside India and as satisfying the export conditions under the notified exemption. The Tribunal followed its earlier decision between the same parties on the identical issue, so the service tax demand and penalty did not survive and the assessee was entitled to the exemption.

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Issues: Whether clinical trial, testing and analysis services, where the report was delivered to clients outside India, constituted export of services so as to qualify for exemption under Notification No. 11/2007-ST dated 01.03.2007.

Analysis: The service of testing and analysis was held to be complete only upon delivery of the report to the client. Since the report was delivered outside India and used outside India, the service was treated as partly performed outside India and as satisfying the conditions for export of services. The Tribunal also followed its earlier decision between the same parties on the identical issue.

Conclusion: The demand of service tax and the penalty did not survive, and the assessee was held entitled to the exemption.

Ratio Decidendi: For export classification, a service is regarded as partly performed outside India where its performance is completed by delivery of the report to the client abroad, making the service eligible for exemption under the export rules and the notified exemption.

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