Case Details: Sipra Labs Ltd. vs. Commissioner of Central Excise & Service Tax, Hyderabad-II (2026) 39 Centax 24 (Tri.-Hyd)
Judiciary and Counsel Details
- S/Shri Angad Prasad, Member (J) & A.K. Jyotishi, Member (T)
- Shri B. Venugopal, Adv., for the Appellant.
- Shri A. Rangadham, AR, for the Respondent.
Facts of the Case
The appellant was engaged in conducting bioequivalence and bioavailability studies in India for overseas clients and, upon completion of such studies, furnished reports and technical data to clients located abroad through electronic means and courier. The appellant received consideration in convertible foreign exchange and claimed the benefit of export of services under the applicable rules. The department denied such a benefit on the grounds that the entire activity of testing and analysis was performed within India and that the furnishing of reports was not an essential component of the service. Consequently, proceedings were initiated for the recovery of service tax under the provisions of the Finance Act, and the appellant contested the same by contending that part of the service was effectively performed outside India when the results were delivered and used abroad. The matter was accordingly placed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
CESTAT Held
The CESTAT held that the services rendered by the appellant fell within the ambit of technical testing and analysis services governed by Rule 3(2) of the Export of Services Rules, 2005, wherein even partial performance of service outside India would qualify the transaction as export. It was observed that furnishing of reports and technical data to clients abroad constituted an integral part of the service and amounted to part performance outside India. The Tribunal further relied upon clarification issued by the Central Board of Indirect Taxes and Customs (CBIC) to interpret the expression ‘used outside India’ as referring to the place where the benefit of service accrued, which in the present case was outside India. The contention of the department regarding the applicability of the second proviso to Rule 3(1)(ii) was rejected on the ground that the said proviso was in addition to the first proviso and was applicable only to services provided through the internet or electronic network in relation to goods located outside India, and therefore had no application to the facts of the present case. Accordingly, the impugned order was set aside, and the benefit of export of service was allowed to the appellant.
List of Cases Cited
- Commissioner v. BA Research India Ltd — 2010 (18) S.T.R. 439 (Tri.-Ahmd) — Relied on [Paras 4, 10]
- Commissioner v. SGS India Pvt. Ltd. — 2014 (34) S.T.R. 554 (Bom.) — Referred [Para 4]
- SGS India Pvt Ltd v. Commissioner — 2011 (24) S.T.R. 60 (Tri. – Mumbai)— Relied on [Paras 4, 10]
List of Departmental Clarification Cited
- CBIC Circular No. 111/5/2009-S.T., dated 24-2-2009 [Para 5]
- CBIC Circular No. 141/10/2011-TRU, dated 13-5-2011 [Paras 5, 10]
List of Notifications Cited
- Notification No. 5/2008-ST, dated 1-3-2008 [Para 11]
