2015 (4) TMI 290 - HC - Service Tax

Court dismisses writ petition on exemption notification amendment, deems it remedial, not clarificatory.

M/s. Life Cell International (P) Ltd. Versus Union of India, Directorate General of Central Excise Intelligence, The Commissioner of Service Tax

The court dismissed the writ petition, ruling that the amendment to the exemption notification is remedial and not clarificatory, with prospective effect ... Effect of amendment of Notification - Retrospective or prospective - Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation - Notification No. 25/2012 dated 20.6.2012 as amended by 4/2014-ST dated 17.2.2014 - Exemption in the nature of clarificatory or not - Held that:- services provided by the petitioner, viz., collection of umbilical blood and tissue and preserving in cold storage, has not been included in the 'Negative list of service' to claim exemption of service tax. However, according to the petitioner, pursuant to the efforts taken by the petitioner and the Association of Stem Cell Banks of India, the Ministry of Health & Family Welfare, issued a memorandum dated 22.5.2013 to the first respondent recommending that the services rendered by the stem cell banks are part of health care services and based on which, the said mega exemption notification dated 20.6.2012 was subsequently amended by inserting Entry No.2A which read 'Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation' and thereby the services of the petitioner are recognized as fallen within the ambit of 'health care services' and exempted from the whole of the service tax leviable under Section 66 B of the Finance Act. If the amendment introduced by Notification No.4/2014-ST, dated 17.2.2014, is declaratory or clarificatory in nature, it is no doubt, it will have retrospective effect and if the amendment is remedial in nature it can have only a prospective effect unless specifically expressed to the contrary. - amendatory statutes, like original statutes, will not be given retroactive construction, unless the language clearly makes such construction necessary. In other words, the amendment will usually take effect only from the date of its enactment and will have no application to prior transactions, in the absence of an expressed intent or an intent clearly implied to the contrary' and that where a statutory provision is in its nature clarificatory, it will be presumed to be retrospective unless the contrary intention is clearly indicated by the Legislature, the reason being that its underlying purpose of explaining or clarifying the existing law will be effectively served only by giving it such a retrospective construction. So-called amendment, admittedly, has been inserted by way of Entry 2A into the exemption Notification, dated 20.6.2012 by Notification No.4/2014-ST dated 17.2.2014 to the effect that 'Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation'. Therefore, the intention of the legislature is clear that bringing the services provided by cord blood banks by way of preservation of stem cells under the exemption Notification in order to give exemption of service tax, however, it has not been specifically mentioned that the said amendment should be with effect from the date of exemption Notification. i.e. 20.6.2012, wherein, originally, Entry No.2 has been inserted, giving exemption towards healthcare services by clinical establishment, an authorised medical practitioner or para-medics. Therefore, by virtue of such amendment, it should be construed that the establishments which provides the above said services will get exemption of service tax with effect from the date of amendment, i.e. 17.2.2014 only and they cannot claim it with retrospective effect. - so-called amendment is only a remedial nature and it can have prospective effect only. If at all the legislature thought it fit to extend exemption with retrospective effect, it would have certainly expressed by mentioning specifically to the effect that the amendment would be with effect from 20.6.2012. Since the amendment having been brought into force from a particular date, i.e. 17.2.2014, no retrospective operation thereof can be contemplated prior thereto. Supreme Court in WPIL Ltd [2005 (2) TMI 137 - SUPREME COURT OF INDIA], having considered the fact that already, the Government issued Notification dated 1.3.1994, giving exemption from imposing excise duty on parts of power driven pumps used in the factory premises for manufacture of power driven pumps and to clarify the position, the subsequent notification dated 25.4.1994 was issued giving exemption towards the goods that are used within the factory of production in the manufacture, held that the subsequent notification was not a new one granting exemption for the first time in respect of parts of power driven pumps to be used in the factory and therefore, the subsequent notification is clarificatory nature and it has to be given with retrospective effect. - The said judgement is not applicable in the present case and distinguished. But in the present case, it is not in dispute that the so-called amendment Notification issued by the Government, giving exemption for the first time towards the services provided by cord blood banks by way of preservation of stem cells and hence, it cannot be considered as clarificatory in order to give retrospective effect. - Decided against Petitioner. Issues Involved:1. Maintainability of the writ petition.2. Whether the amendment to the exemption notification is clarificatory and should be given retrospective effect.3. Determination of whether the services provided by the petitioner fall within the ambit of 'health care services.'Issue-wise Detailed Analysis:1. Maintainability of the Writ Petition:The respondents argued that the writ petition is not maintainable because it involves the determination of the rate of duty, which falls under the exclusive jurisdiction of the Hon'ble Supreme Court. However, the court held that the issue in the writ petition is whether the amendment is clarificatory and should be given retrospective effect. Therefore, the writ petition is maintainable as it does not involve the determination of the rate of duty.2. Whether the Amendment to the Exemption Notification is Clarificatory and Should be Given Retrospective Effect:The petitioner argued that the amendment to the exemption notification by inserting Entry No.2A should be considered clarificatory and given retrospective effect from 01.07.2012. The court examined whether the amendment is declaratory/clarificatory or remedial. It was held that usually, an amendment takes effect from the date of its enactment unless expressly stated otherwise. The court referred to several Supreme Court decisions to support this principle. The court concluded that the amendment is remedial in nature and can only have a prospective effect from 17.02.2014. The court noted that if the legislature intended retrospective effect, it would have explicitly mentioned it. Therefore, the amendment cannot be given retrospective effect.3. Determination of Whether the Services Provided by the Petitioner Fall Within the Ambit of 'Health Care Services':The court clarified that it would not render any finding on whether the petitioner's activities fall within the ambit of 'health care services.' This determination is to be made by the authorities based on scrutiny of documents and thorough investigation. The court emphasized that the authorities are at liberty to decide this aspect in accordance with the law.Conclusion:The writ petition was dismissed, and the court held that the amendment to the exemption notification is remedial and not clarificatory, thus having only a prospective effect from 17.02.2014. The court did not make any determination on whether the petitioner's services fall within 'health care services,' leaving this to be decided by the appropriate authorities.