TaxTMI 
TaxTMI 
2025 (7) TMI 1007
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....from 01.07.2012 to 16.02.2014, do not fall within the scope of "Healthcare Services". Consequently, the appellant was held liable to pay service tax on the said services along with interest and penalties. 2. The basic facts of the case, as projected by the appellant, are as follows: 2.1. The appellant is a joint venture company of M/s. Stemcyte Inc., USA, M/s. Apollo Hospital Enterprises Ltd., and M/s. Cadila Pharmaceuticals Ltd., established in 2008. It is engaged in the collection, processing, testing, and storage of umbilical cord blood units and their therapeutic application. The appellant is a member of the Association of Stem Cell Banks of India. 2.2. On 27.12.2011, the Ministry of Health and Family Welfare, Government of India, issued notification No. GSR 899(E) notifying the Drugs and Cosmetics (3rd Amendment) Rules, 2011. Under these rules, cord blood banks were required to obtain registration. Part XIID of the Rules set out detailed requirements relating to the collection, processing, testing, and release of umbilical cord blood-derived stem cells. 2.3. Subsequently, the Ministry of Finance, Government of India, issued Notification No.25/2012-Service Tax dated....
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....the heading "Healthcare Services". 2.10. On 26.03.2015, the appellant filed an application seeking refund of the deposited amount of Rs.40,00,000/-. However, by communication dated 27.03.2015, the Superintendent of Central Excise, Ahmedabad-III, refused to refund the said amount. 2.11. Thereafter, the Commissioner issued a show cause notice dated 08.04.2015 calling upon the appellant to show cause why their refund claim should not be rejected under Section 11B of the Central Excise Act, 1944. The appellant filed a written reply, but the Commissioner passed Order-in-Original No. 108/Ref/ST/DC/2015-16 dated 31.08.2015, rejecting the refund claim on the ground that the investigation was still pending. The Commissioner (Appeals) also dismissed the appellant's appeal by Order-in-Appeal dated 28.07.2016. Aggrieved, the appellant preferred a further appeal before the CESTAT under Section 86(1) of the Finance Act, 1994. 2.12. During the pendency of the aforesaid appeal, the Commissioner, CGST & Central Excise, Gandhinagar issued a show cause notice dated 28.07.2017 demanding service tax of Rs. 2,07,29,576/- along with interest for services rendered between 01.07.2012 and 16.02.201....
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...., the learned senior counsel submitted that the expression "any service" used therein must be interpreted liberally, covering services for diagnosis, treatment, or care of illness, injury, deformity, abnormality, or pregnancy. Judicial precedents including K.P. Mohammed Salim v. Commissioner of Income-tax 2008 (11) SCC 573, and Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243, were relied upon to demonstrate that the word "any" has wide import and must be read expansively. 3.3. It was further submitted that the CESTAT failed to appreciate the beneficial nature of the exemption under Notification No. 25/2012-ST. Such exemptions, being in furtherance of public health, must be interpreted liberally in favour of the assessee. The later insertion of Entry 2A could not curtail the scope of Entry 2, as both pertain to the same class of services. 3.4. The learned senior counsel further argued that the CESTAT's finding - that the appellant's services are not part of any recognized system of medicine - is perverse and unsupported by evidence. This finding merely reiterated the reasoning of the Order-in-Original dated 18.05.2018 without independently evaluating the appellant....
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....of umbilical cord blood stem cells are not covered under the said notification for exemption. 4.2. It was also submitted that the exemption for the appellant's services was specifically introduced only by Notification No. 4/2014-ST dated 17.02.2014 through insertion of Entry 2A. Hence, during the period from 01.07.2012 to 16.02.2014, the appellant's services were neither covered under the Negative List nor exempted by Notification No. 25/2012-ST and they are chargeable to service tax. 4.3. The learned counsel further submitted that the appellant had failed to obtain proper service tax registration for the said services and also failed to declare and assess the correct value of taxable services. Consequently, the appellant was rightly held liable to pay penalties under Sections 77(1)(a), 77(1) (d), 77(2) and 78 of the Finance Act, 1994. 4.4. Accordingly, the learned counsel submitted that the impugned order calls for no interference and that the present appeal deserves to be dismissed. 5. We have considered the rival submissions and carefully perused the materials placed on record. 6. Admittedly, the appellant is engaged in the business of stem cell banking services, ....
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....ng; (vi) I impose penalty of Rs.10,000/- (Rupees Ten Thousand Only) upon them under Section 77(2) of the Finance Act, 1994 for their failure to assess their service tax liability & failure to file prescribed returns in Form ST-3 within stipulated time frame for the said service under Section 70 of the Finance Act, 1994; (vii) I impose penalty of Rs.1,03,64,788/- (Rupees One Crore Three Lakhs Sixty Four Thousand Seven Hundred and Eighty Eight Only) (Fifty percent of the service tax demanded) upon them under Section 78 of the Finance Act, 1994 for non-payment of service tax on account of misstatement / suppression of facts and contravention of provisions of the Finance Act, 1994 and Service Tax Rules, 1994 with intent to evade payment of Service Tax." The CESTAT confirmed the demand of service tax, interest and penalties imposed, and the rejection of refund claim made by the appellant, by the order impugned herein. 7. Now, the primary dispute involved herein, relates to the period between 01.07.2012 and 16.02.2014 and whether the appellant's services during this period fell within the ambit of "Healthcare Services" and are therefore, eligible for exemption fro....
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....st be an active and deliberate act on the part of the assessee to evade payment of tax. Mere non-payment of tax, without any element of intent or suppression, is not sufficient to attract the extended limitation period. In this regard, reference may be made to the following judgments: (i) Padmini Products v. CCE (1989) 4 SCC 275 "12. Shri V. Lakshmi Kumaran, learned counsel for the appellant drew our attention to the observations of this Court in CCE v. Chemphar Drugs and Liniments, Hyderabad [(1989) 2 SCC 127 : 1989 SCC (Tax) 245] where at p. 131 of the report, this Court observed that in order to sustain an order of the Tribunal beyond a period of six months and up to a period of five years in view of the proviso to sub-section (1) of Section 11-A of the Act, it had to be established that the duty of excise had not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. It was observed by this Court that something positive other than mere inaction or failur....
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....ents postulate a positive act. Failure to pay duty or take out a licence is not necessarily due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision. Shri Ganguly, appearing for the Revenue, contended before us that the appellant should have taken out a licence under Rule 174 of the said Rules because all the goods were not handicrafts and as such were not exempted under Notification No. 55 of 1975 and therefore, the appellant were obliged to take out a licence. The failure to take out the licence and thereafter to take the goods out of the factory gate without payment of duty was itself sufficient, according to Shri Ganguly, to infer that the appellant came within the mischief of Section 11-A of the Act. We are unable to accept this position canvassed on behalf of the Revenue. As mentioned hereinbefore, mere failure or negligence on the part of the producer or manufacturer either not to take out a licence in case where there was scope for doubt as to whether licence was required to be taken out or where there was scope for doub....
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....said directions. This appeal is disposed of accordingly." (ii) CCE v. Chemphar Drugs and Liniments ( 1989 ) 2 SCC 127 "7. The respondent filed an appeal before the Tribunal. The Tribunal considered the matter and noted that the appellant's case was that the demand for duty for the period beyond six months was time-barred; and the respondent's case was that the demand for the period beyond 6 months from the receipt of show-cause notice, was time-barred inasmuch as there was no suppression or misstatement of facts by the appellant with a view to evade payment of duty. In support of its claim the respondent produced classification list approved by the authorities during the period 1978-79, and also produced extracts from the survey register showing that the officers had been visiting its factory from time to time and also taking note of the previous goods manufactured by the respondent. The plea of the Revenue was that there was suppression and/or mis-declaration and/or wrong information furnished in the declaration itself. The Tribunal noted the facts as follows: "We observe it is not denied by the Revenue that the appellants had been submitting their clas....
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....e Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11-A of the Act, it has to be established that the duty of excise has not been levied or paid or shortlevied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before (sic beyond) the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. ....
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....ry as such had adopted the same manufacturing process and had been extended the benefit of the exemption notification of 1989 has not been called in question. If the stand of the manufacturer is correct, there was no reason as to why it should be singled out. 13. This Court decided Bakelite Hylam Ltd. [(1997) 10 SCC 350] on 10-3-1997. The impugned notice was issued only on 9-12-1997 evidently relying on or on the basis thereof. 14. It is not a case where the respondents had not disclosed the activities of manufacturing products carried out by them by declaration or otherwise. They responded to each and every query of the appellant, as and when called upon to do so. The authorities of the appellant must have verified the said disclosures. At least they are expected to do so. The disclosure made by the respondent was acceptable to them. Their bona fides were never questioned. 15. The applicability of the extended period of limitation is, therefore, required to be considered in the aforementioned context. The proviso, it is trite, provides for an exception. It is not the rule. A case, therefore, has to be made out for attracting the same. 16. In Pri....
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....ct, 1994 is wholly unwarranted. Mere non-payment of service tax, by itself, does not justify the invocation of the extended limitation period. Accordingly, the show cause notice issued by the department is clearly time-barred. On this ground alone, the impugned order deserves to be set aside. 10. We next come to the question of the period between 01.07.2012 to 17.02.2014, for the purpose of exemption from the levy of service tax. Undoubtedly, the services provided by cord blood banks, including preservation of stem cells or any other services related to such preservation, are exempt from service tax, under Entry 2A of Notification No. 4/2014-ST dated 17.02.2014. According to the appellant, the said notification is clarificatory in nature and therefore, ought to be applied retrospectively with effect from 01.07.2012. 10.1. In the present case, since we have rendered a finding that stem cell banking services constitute a healthcare service, which was specifically so stated by the notification dated 17.02.2014, the said notification must necessarily be held to be illustrative and clarificatory to that extent. This clarification/specific exemption, coupled with our finding that s....
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....e tax with effect from the date of amendment, i.e. 17.2.2014 only and they cannot claim it with retrospective effect. The uncontroverted position is that before the amendment came into force, for the services provided by the cord blood banks were leviable and in fact, the petitioner has also paid Rs. 1 Crores each towards service tax with effect from 01.07.2012. Therefore, from 17.2.2014 onwards, by virtue of amendment, the said services were exempted from levy of service tax, which by itself explicit that the said amendment is extending remedial effect to the cord blood banks from being levied with service tax. Therefore, having regard to the same, this Court is of the considered view that the 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. 25. As regards the d....
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.... is not to be presumed and rather there is presumption against retrospectivity, it is open for the legislature to enact laws having retrospective operation. This can be achieved by express enactment or by necessary implication from the language employed and if it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will give it such an operation and in the absence of a retrospective operation having been expressly given, the courts may be called upon to construe the provisions and answer the question whether the legislature had sufficiently expressed that intention giving the statute retrospectivity. When this ratio is applied to the case on hand, I am of the view that the language used in the so-called amendment is clear that the exemption is given towards the services provided by cord blood banks by way of preservation of stem cells and it cannot be construed that such exemption shall have retrospective effect. 27. For the foregoing discussion, I am of the considered opinion that the socalled amendment cannot be viewed as a clarificatory one and therefore, this Court is unab....
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.... ""health care services" means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma." It is clear that the use of the phrase "any service" gives an expansive scope to the term. Though the terms "diagnosis", "treatment", and "care" are not specifically defined under the Finance Act, 1994, their ordinary meanings (as per Oxford and Black's Law Dictionaries) include acts like identifying illness causes, curing diseases or injuries, and ensuring well-being or preventive healthcare. 11.2. The appellant qualifies as a clinical establishment under clause 2(j) of the Notification No.25/2012-ST, which fact is not disputed by the Department. The appellant's core activities - collection and preservation of umbilical cord blood (UCB) stem cells - are preve....
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....ne is only for diagnosis and treatment of illness, many of the indigenous system of medicines, seek to prevent rather than prescribe. ... 20. Therefore, an exemption notification, which is understood by the respondents to confer a benefit upon the clinical establishments, cannot be made inapplicable to a holistic health care institution such as the petitioner herein, as the same would tantamount to killing our indigenous system of health and well being. A system of medicine which focused mainly on healthy living and not merely a prolonged existence cannot be denied the benefit of the exemption notification on the basis of a misconception that a clinical establishment is one that would treat people after they fall ill and not one which will prevent people from falling ill." 11.7. In CCE, Bombay-I & Anr. vs. Parle Exports Pvt. Ltd. ( 1989 ) 1 SCC 345, this Court held that an exemption notification has statutory force equivalent to that of the Act. The relevant paragraphs are extracted as under: "17. ................ The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind ....
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....r the maintenance of the vital process" and an average Indian will not treat nonalcoholic beverage bases as food products or food preparations in that light." Additionally, in Advance Ruling No. KAR ADRG 24/2020, the Karnataka Authority for Advance Ruling held that stem cell donor - related services are exempt as healthcare services. 11.8. Notably, the Ministry of Health and Family Welfare, through an Office Memorandum dated 22.05.2013 clarified in consultation with the National AIDS control Organization that stem cell banking is a part of "health care services" and qualifies for exemption. The said O.M. is reproduced below, for the sake of reference: X-11035/41/2012-DFQC (Pt) Government of India Ministry of Health & Family Welfare Department of Health and Family Welfare (DFQC Section) Nirman Bhawan, New Delhi Dated the 22 May, 2013 OFFICE MEMORANDUM Subject: Service Tax Exemption to Stem Cell Banks - Regarding. The undersigned is directed to refer to representations dated 24.07.2012, 21.09.2012, 27.02.2013, 08.03.2013 and 20.03.2013 of Association of Stem Cell Banks of India on the subj....