TaxTMI 
TaxTMI 
2019 (1) TMI 1119
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....also on job work basis for various principals. The goods are cleared from the appellant's premises by their principals. After manufacturing, the appellant is also required to conduct certain tests such as validation and stability analysis tests as per the directions of the principal manufacturers on the products to ensure that they meet the specifications. Thereafter, the appellants are required to provide Certificates that the products are as per the specifications. The appellant is getting paid by their principals for the job work which they undertake. Additionally, the appellant gets paid separately testing charges for the tests which they conduct on the pharmaceuticals before clearing them. The appellant used to pay excise duty under Se....
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....ation is not sustainable and the demand is for period January, 2006 to March, 2008 and the show cause notice was issued on 04.05.2009 invoking extended period of limitation under Sec.73(1) of the Act. There was no fraud, wilful misstatement, collusion or suppression of facts and the department was fully aware of the mode of their operations. The initial letter of the department asking them to pay service tax towards testing charges was dated 14.12.2005 and the response on 27.12.2005. This was followed by a series of correspondence and then an audit note on 08.09.2008. Final show cause notice was issued on 04.05.2009. This would show that entire matter was fully within the knowledge of the department at all relevant time. Therefore, extended....
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....vity does not become a separate taxable service. She relies on the case law of Tribunal-Chennai in the case of Tamil Nadu Water Supply and Drainage Board, Madurai in Appeal No. ST/CO/023/2011 and ST/434/2011 holding that testing of water which was an essential part of the contract cannot be treated as a separate service rendered by the appellant. She also relied on the case of Midas Care Pharmaceuticals Pvt Ltd [2015 (37) STR 346 (Tri-Mumbai)] in which a pharmaceutical company which was doing testing and analysis of the products was held not liable to pay service tax as these were not separate activities but were part of the products which they manufacture. She also relies on the CBEC circular 334/1/2008-TRU dated 29.02.2008 in which it was....
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.... In this case, they are getting paid by their principals and therefore, it is a service which they are rendering to them. He prays that the appeal may be rejected. 5. We have considered the arguments on both sides and perused the records. We find that there is no dispute on the facts of the case. The appellant is manufacturing pharmaceutical products as loan licensee for their principals and were getting paid the processing charges. The pharmaceuticals so produced are being cleared directly from the assessee's premises by the principals for further distribution. Pharmaceuticals, by their very nature, require testing before they can be sold in the market. It is not in dispute that the appellant is conducting such tests only before releasi....