The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the penalty imposed for non-payment of service tax on testing, inspection, and certification services on the grounds of limitation.
Mitra S. K. Pvt. Ltd, the appellant assessee was providing the service of Testing, Inspection, and Certification Services and during the period October 2005 to September 2010, they had been providing the service for the goods which were to be exported from India to other foreign buyers.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the service tax demand on non-payment of tax by the assessee.
Anand Sen, S. Mandal and R. Chaudhuri, the counsels for the assessee contended that according to Rule (3)(1)(ii) of Export of Service Rules 2005, wherein, the services falling under Section 65 (105)(zzz) of the Export of Service Rules were included, and for such services even if the service had been partly rendered within India, the same would be treated as Export of services.
Also submitted that the entire testing service was provided within India but the Test report generated, was communicated to the overseas importer by way of internet transmission and by way of courier it will still make it a service that has been partly performed outside India to get the benefit of the services being treated as export of services which was not liable to service tax.
Joydip Choudhury, the counsel for the department relied on the decisions made by the lower authorities and contended that the services rendered by the assessee were not exactly considered as export of service and they are liable to pay service tax.
The Bench observed that the assessee should not be fastened with the demand for the extended period and the Adjudicating Authority to work out the details of the demand on the normal period which would be payable by the assessee along with interest.
The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) held that on account of limitation, the confirmed demand for the extended period and the imposition of penalty are quashed.
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