The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand on technical inspection and certification agency service on the grounds of service tax exemption.
Sidmak Laboratories (India) Private Limited, the appellant assessee manufactures pharmaceutical products, which it also exports. It was registered with the Service Tax Department for providing various taxable services.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand that the service tax of Rs. 4,55,734/- from the assessee under the proviso to section 73 (1) of the Finance Act,1994 along with interest under section 75 of the Finance Act.
Akshay Soni, the counsel for the assessee contended that no service tax was payable on the amounts that the assessee had paid to the US FDA to obtain their approval for the export of their drugs.
S.K. Meena, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was liable for the payment of service tax.
The Bench observed that the US FDA was a statutory authority and its approval of pharmaceuticals to be exported to that country was the statutory function.
The two-member bench comprising Dilip Gupta (President) and Subba Rao (Technical) held that no service tax was payable on the amounts that the assessee had paid to the US FDA to obtain their approval for the export of their drugs.
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