2018 (12) TMI 387 - HC - Service Tax

Service provided by way of technical testing or analysis of new developed drugs - exemption from payment of service tax - Held that - This Court after taking into account the material available on record, is of the opinion that the present appeal certainly deserves to be admitted on the substantial questions of law - it is directed that the respondent shall not take any coercive action against the petitioner.

Summary

Issues:
1. Exemption from payment of service tax based on specific notifications.
2. Interpretation of the role of the appellant as a Clinical Research Organization.
3. Compliance with Good Clinical Practice Guidelines issued by relevant authorities.
4. Pre-deposit requirement in case of departmental appeal.

Exemption from payment of service tax based on specific notifications:
The appellant sought exemption from service tax based on notifications dated 01.03.2017 and 20.06.2012, which exempt service provided by clinical research organizations conducting drug trials approved by the Drug Controller General of India. The appellant argued that they were approved to conduct drug trials and highlighted an agreement on record. The Commissioner concluded that no service tax was applicable, but the Appellate Tribunal reversed this decision. The appellant claimed they were being singled out, and the respondent argued that the appellant was only an investigator and not entitled to the exemption.

Interpretation of the role of the appellant as a Clinical Research Organization:
The Court considered whether the appellant was correctly classified as a trial site and principal investigator rather than a Clinical Research Organization (CRO). The appellant contended that they should be considered a CRO based on the agreement with the sponsors of the clinical trial. The Court questioned whether the CESTAT properly assessed the appellant's role as a CRO, emphasizing that a CRO encompasses various units involved in clinical trials.

Compliance with Good Clinical Practice Guidelines:
The Court evaluated whether the CESTAT's finding that the appellant was not a CRO contradicted the Good Clinical Practice Guidelines issued by relevant health authorities. The appellant argued that the CESTAT's classification was inconsistent with these guidelines, which define a CRO as a collective term for multiple units involved in clinical research.

Pre-deposit requirement in case of departmental appeal:
The appellant argued that since the Commissioner's order was favorable and there was a departmental appeal, no pre-deposit should be required. The Court directed that no coercive action be taken against the appellant and scheduled the appeal for final hearing.

This judgment addresses the appellant's claim for exemption from service tax, the interpretation of their role as a Clinical Research Organization, compliance with relevant guidelines, and the pre-deposit requirement in the context of a departmental appeal. The Court considered the specific notifications, the appellant's status, and the guidelines to determine the applicability of service tax and the need for pre-deposit in the ongoing legal proceedings.