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Reliance Clinical Research Services Pvt Ltd, Siro Clinpharm Pvt Ltd Versus Commissioner of Service Tax, Mumbai-II

2015 (10) TMI 858 - CESTAT MUMBAI

Clinical Trial/Research Service – from 01.07.2003 to 31.03.2006 - amendment in the nature of retrospective or not - Revenue contends that the same is taxable due to an addition of Explanation in respect of the definition of the Technical Testing and Analysis as per Section 65 (106) of the Finance Act, 1994.

Held That:- the original definition clearly excluded all these services from the definition since the expression, any service provided in relation to human beings and animals is ve .....

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ssue is no more res integra - Amendment in reality expounded the scope of the definition and therefore, it cannot be clarificatory in nature – Impugned orders are unsustainable and are set aside - Decision made in the case of B.A. Research India Ltd. [2010 (2) TMI 230 - CESTAT, AHMEDABAD] and Synchron Research Services Pvt. Ltd. [2011 (8) TMI 357 - CESTAT AHMEDABAD] followed – Decided in favour of the Appellant. - Appeal No. ST/75 & 95/2010, ST/CO/94/11 - Final Order Nos. A/2663-2665/2015-WZB .....

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d of as it is not raising any appeal from the order decided by adjudicating authority. 3. Heard both sides and perused the records. 4. Brief facts that arise for consideration are that the appellant herein are engaged in providing Clinical Trial/Research Service to various Pharmaceutical companies located in India and abroad in respect of clinical testing of new drugs. Revenue authorities are of the view that the services rendered by the appellants would be covered under "Technical Testing .....

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the appellants and rejected the contentions and confirmed the demands with interest and also imposed penalties. 5. Learned Counsel appearing for the appellants would draw our attention to the definition of "Technical Testing and Analysis" and submit that prior to introduction of the explanation i.e. from 01.05.2006, the activities of Clinical Trial and Tests of new drugs carried out by the appellants cannot be held to be liable to service tax. It is his submission that an Explanation .....

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d D.R. reading the very same Explanation, submits that the explanation only sought to clarify what is covered under Technical Testing and Analysis services. He would submit that the Explanation is stating the obvious as to exclusion in the Explanation in respect of pharmaceuticals which was never covered under the main definition as the main definition talks about the services in relation to clinical trial services which would cover under the Technical Testing and Analysis undertaken by the appe .....

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hmd.) and Quintiles Research (India) Pvt. Ltd. - 2009 (14) STR 268 (Tri. - Ahmd.) and submit that it was considered by the Bench that the Explanation is only giving clarification to the main definition. 7. We have considered the submissions made by both the sides and perused the records. 7.1 On perusal of the records we find that the facts are not much in dispute, in as much during the period 01.07.2003 to 31.03.2006 the appellant undisputedly rendered the services of clinical testing of new dru .....

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produce the relevant paragraphs:- 8. We have considered the submissions made by both the sides. The Commissioner's observation which led to the conclusion that notifications have retrospective effect are re-produced :- "53. The noticee has submitted that the explanation has the effect of expanding the scope of "Technical Testing and Analysis" service as it existed prior to 01.5.2006. Their argument is that there are two types of tests conducted on drugs. The first type is test .....

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Explanation" had the effect of expanding the scope of Section 65 (106). Therefore, this "Explanation" cannot have retrospective effect. 54. I do not agree with this contention. As it stood prior to 01.5.2006, Technical Testing and Analysis service means any service in relation to physical, chemical, biological or any other scientific testing or analysis of goods or materials, but does not include any testing or analysis service provided in relation to human beings or animals. Wha .....

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However, I do agree that there is some ambiguity in the interpretation of Section 65 (106) as it stood earlier. It is for this very leason that an explanation had to be introduced in this Section. We are unable to agree with the Commissioner's observation. The explanation introduced by amendment gives an impression that the purpose is to make it clear that the definition does not include testing and analysis for the purpose of determination of nature of diseased condition, identification of .....

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r animals was excluded. To make it includable in the definition, the amendment becomes necessary. Therefore, as contended by the appellants, the amendment in reality expounded the scope of the definition and therefore, it cannot be clarificatory in nature. 9. We are supported in taking this view from the decisions cited by learned advocate in the case of Skycell Communications Limited. The Tribunal was considering the explanation added to Notification No. 11/97-Customs dated 01.3.1997 by amendin .....

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xplanation imposed restriction prejudicially on importers of computer software and hence cannot be given retrospective effect. In the case of Gothi Thermoforming Inds the Tribunal observed that insertion of clause (f) in Notification No. 16/97 had the effect of reducing the scope of exemption of intermediate products (inputs) from payment of duty, in this view the clause (f) has to be seen as substantive provision rather than clarificatory of pre-existing provisions of the notification. In the c .....

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ng the true and natural meaning of the words or the provisions of the Act. The meaning attributable to the relevant provisions of the Act without the Explanations shall have to be considered first, to find out whether it created an artificial situation, or created ambiguity, and if so, the Explanation may be considered as having injected the true and real meaning to those provisions from the very inception of the provisions to which the Explanation is added." 10. In the case of Sedco Forex .....

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