2026-VIL-706-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Classification of service as 'Technical Testing and Analysis Service' (TTAS) vs 'Scientific or Technical Consultancy Service' (STCS) – Providing of services such as Bio-Equivalence (BE) studies and Bio-Availability (BA) studies to clients located outside India - The respondent-assessee claimed that the services provided to foreign clients should be treated as export of service under the Export of Service Rules, 2005, as the final reports were delivered outside India. The department contended that after the 2008 amendment to the rules, services classified under TTAS cannot be treated as export of service - HELD - The respondent's activities were correctly classified under TTAS by the adjudicating authority, and this classification was not disputed by either party. The respondent's work involved conducting various research activities in India and providing deliverables such as reports, samples, and related documents to the foreign clients, which constituted an integrated part of the overall work order - The delivery of the final reports outside India constitutes part performance of the service, making it eligible as export of service under the Rules. The essential ingredients for export of service, such as receipt of consideration in convertible foreign exchange and the use of the service outside India, were fulfilled in this case. Therefore, the services provided to foreign clients were correctly treated as export of service by the adjudicating authority. The impugned order to that extent is correct and department’s appeal is rejected to that extent – The appeal is allowed by way of remand only for the limited purpose of calculating cum-duty benefit for computing total demand in terms of section 67 of the Finance Act, 1994 and consequent reduction in penalty - Reduction in mandatory penalty - As per the statutory provisions, equal penalty has to be imposed in terms of total duty confirmed and merely because part payment has already been made before and appropriated later, there cannot be proportionate reduction in the mandatory penalty. Therefore, to that extent, the impugned orders are not correct and accordingly, the mater is required to be remanded back for limited issue of re-computation of the penalty amount - Cum-duty benefit – The adjudicating authority has not allowed the said benefit, however, in the absence of any supporting document, the matter is required to be remanded back to the Original Adjudicating Authority to consider the submissions of the appellant for allowing the cum-duty benefit in respect of demand confirmed vide the impugned order.
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