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TMI Blog2011 (8) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by them will not fall under the category of testing and analysis services as they are only undertaking clinical trials and the explanation which was introduced by the Finance Act from 01.05.06 is not merely clarificatory in nature but actually expands the scope of "Technical Testing and Analysis Services". After granting an opportunity of personal hearing, the adjudicating authority did not agree with the contentions raised by the appellant. He confirmed the demand of service tax along with the interest and also imposed equivalent amount of penalty. Hence this appeal. 3. Learned Counsel would submit that the issue in this case is for the two periods i.e. July 2003 to 30.04.06 and 01.05.06 to 30.06.06. 4. It is his submission that for the period from 01.05.06 to 30.06.06, they are not disputing the tax liability and are ready to pay the same as the definition of technical testing and analysis services would include the services rendered by them. It is his submission that they are challenging the imposition of demand of service tax for the period prior to 01.05.06 for which he would take us through the definition of the "Testing and Analysis Services". He would also draw our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is a settled law that no retrospective effect can be given to a statute which brings about a substantive change in the law. 45. Prior to the introduction of explanation, the section reads as under: "Technical testing and analysis" means any service in relation to physical, chemical, biological or any other scientific testing or analysis of goods or material or any immoveable property, but does not include any testing or analysis service provided in relation to human beings or animals". 46. From this definition, it is clear that any testing of drugs in any manner is included. What is excluded is only testing of samples which lead to the diagnosis or any other conclusion regarding a human being or an animal. In other words, the object to be tested or analysed in order to reach a conclusion should be a drug and not a human being or an animal. As long as the condition is satisfied, such testing and analysis would be covered as a taxable service. 47. In the case of clinical trials, it is very clear that what is being tested is not the condition of the human being, but the efficacy and safety of the drug. At the end of the trials, the conclusion reached is about the drug and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... testing is the effect of the drugs on human beings (clinical trials). These two types of tests are covered under different sets of rules in the Drugs and Cosmetics Rules, 1945. According to M/s. Quintiles Spectral (India) Pvt. Limited, Ahmedabad, Technical Testing and Analysis service, as it stood prior to 1-5-2006, covered only the first type of tests and therefore, the introduction of the "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 1-5-2006, 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. What this means is that the material which is tested (i.e. the specimen) should not be a human being or an animal is not included in the definition. However, it would certainly include all types of tests, whether clinical trials or otherwise, conducted on the drugs themselves. This position continues unchanged even after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 case of Commissioner of Income Tax v. Rajasthan Mercantile I Co. Limited and others reported in ITR, Volume-214 page No. 400, Hon'ble Delhi High Court observed as "In the instant case, Explanation 2 in question actually purports to be a Provision defining the concept of entertainment expenditure, by including a few kinds of expenditures within its scope. Only because a provision attached to a section bears the nomenclature "Explanation", it cannot always be considered as conveying 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 Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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