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2024 (8) TMI 397 - AT - Service TaxTaxability - Health Care Services or not - providing Stem Cell/ Umbilical Cord Blood Banking Services - covered under the Negative List or under the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 or not - Retrospective application of Notification No. 04/2014-ST or not - reliance placed on Circular No. 334/03/2014-TRU dated 17.02.2014, to emphasize that services provided by cord blood banks by inserting Entry Sl. No. 2A in Exemption Notification No. 25/2012-ST dated 20.06.2012 - invocation of Extended period of limitation. HELD THAT - In the absence of any expression in amending notification supporting retrospective application, it is clear that as per trite law, same cannot be given retrospective application. This Court is, therefore, inclined to follow the principles as laid down in the decision of M/S. LIFE CELL INTERNATIONAL (P) LTD. VERSUS UNION OF INDIA, DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE, THE COMMISSIONER OF SERVICE TAX 2015 (4) TMI 290 - MADRAS HIGH COURT and hold that the retrospective application was never intended through legislative amendment. Even on limitation, the finding of the adjudicating authority correctly upholds the extended period as applicable to the facts and circumstances of the case. Circular No. 334/03/2014-TIU dated 17 February, 2014 cannot therefore, be stated to be supporting retrospective effect and as has been laid down by the Hon ble High Court of Madras and cannot be stated to be clarificatory in the absence of any provision in the notification stating the same to be so. In view of the aforesaid legal position, specifically relating to retrospective application of any amendments, it cannot be held that any serious legal issue of interpretation was involved, which needed fresh ice to be broken. The inaction to take registration despite department s insistence and contents of the Board Circular No. 334/03/2014-TRU dated 17.0.2024. The circular does not indicate in any case, its applicability to the past. Extended limitation therefore has been correctly applied. The legislative mandate or absence of it cannot be expended through Board Circular, in any case. On limitation non filing of returns etc is an action showing persistent and wilful default by appellant specifically considering the testimonial evidence of the concerned staff. The impugned order is well reasoned and backed by sufficient legal and factual materials - the same is therefore sustainable - appeal dismissed.
Issues Involved:
1. Taxability of services provided by M/s StemCyte under the Finance Act, 1994. 2. Applicability of the Negative List and Mega Exemption Notification No. 25/2012-ST. 3. Retrospective application of Notification No. 04/2014-ST. 4. Invocation of the extended period for demand under Section 73(1) of the Finance Act, 1994. 5. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. Detailed Analysis: 1. Taxability of Services Provided by M/s StemCyte: M/s StemCyte India Therapeutics Pvt. Ltd. was engaged in the collection, processing, and storage of Umbilical Cord Blood (UCB) Stem Cells. The primary question was whether these services were taxable under the Finance Act, 1994. The Tribunal observed that the activities performed by M/s StemCyte fell under the definition of "service" as per Section 65B(44) of the Finance Act, 1994, and were not covered under the Negative List (Section 66D). Therefore, these services were taxable from 01.07.2012 to 16.02.2014. 2. Applicability of the Negative List and Mega Exemption Notification No. 25/2012-ST: M/s StemCyte claimed exemption under Notification No. 25/2012-ST, arguing that their services were "Health care services by a clinical establishment." However, the Tribunal clarified that the definition of "Health care services" in Clause 2(t) of the Mega Exemption Notification did not include the services provided by M/s StemCyte. The services of collecting, processing, and storing UCB Stem Cells were not considered as diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy. Consequently, these services did not qualify for exemption under the said notification. 3. Retrospective Application of Notification No. 04/2014-ST: Notification No. 04/2014-ST dated 17.02.2014 amended Notification No. 25/2012-ST to include services provided by Cord Blood Banks by way of preservation of stem cells under the exemption. M/s StemCyte argued that this amendment should be considered clarificatory and thus retrospective. However, the Tribunal, relying on the decision in LIFE CELL INTERNATION (P) LTD vs. Union of India, held that the amendment was prospective. The Tribunal emphasized that amendatory statutes are generally not given retroactive effect unless clearly stated. Therefore, the exemption applied only from 17.02.2014 onwards. 4. Invocation of the Extended Period for Demand under Section 73(1) of the Finance Act, 1994: The Tribunal upheld the invocation of the extended period for demand under Section 73(1) of the Finance Act, 1994. It was observed that M/s StemCyte had not disclosed their taxable activities to the Department, failed to obtain service tax registration in time, and did not file ST-3 returns. These actions were considered as suppression of facts with the intent to evade payment of service tax. Consequently, the extended period of five years was invoked for the recovery of service tax amounting to Rs. 2,07,29,576/- for the period from 01.07.2012 to 16.02.2014. 5. Imposition of Penalties under Sections 77 and 78 of the Finance Act, 1994: The Tribunal imposed penalties under Sections 77 and 78 of the Finance Act, 1994. M/s StemCyte was found liable for penalties due to failure to obtain service tax registration, non-payment of service tax, and non-filing of returns. The Tribunal noted that the suppression of facts and deliberate evasion of service tax warranted the imposition of penalties. The penalty under Section 78 was imposed at 50% of the service tax determined, as the details of transactions were recorded in specified records. Conclusion: The Tribunal concluded that the services provided by M/s StemCyte were taxable from 01.07.2012 to 16.02.2014 and did not qualify for exemption under the Mega Exemption Notification No. 25/2012-ST. The amendment introduced by Notification No. 04/2014-ST was prospective and not retrospective. The extended period for demand was correctly invoked, and penalties under Sections 77 and 78 of the Finance Act, 1994, were justified. The appeal was rejected, and the order of the Commissioner was upheld.
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