Finance Act, 1994 – Exemption notification – “Healthcare Services” – Exemption from payment of service tax – Entitlement to – Services of enrolment, collection, processing, and storage of umbilical cord blood stem cells, provided by the appellant, if fell within the scope of “Healthcare Services” during the disputed period and thus, whether exempted from the levy of service tax as per the 2012 and 2014 Notifications dtd.20.06.2012 and 17.02.2014 issued by the Ministry of Finance – Show cause notice was issued to the appellant stating that its services during the period from 01.07.2012 to 16.02.2014 were a taxable service – CESTAT held that the services provided by the appellants during the disputed period, did not fall within the scope of “Healthcare Services” and thus, the appellant was held liable to pay service tax on the said services along with interest and penalties – Interference with: Held: Appellant’s services are well within the ambit of “Healthcare Services” – As per Entry 2 of the 2012 Notification, services provided by clinical establishments in the nature of healthcare were exempt from service tax – Appellant qualifies as a clinical establishment u/clause 2(j) of the said Notification which fact is not disputed by the Department – Appellant’s core activities i.e. collection and preservation of umbilical cord blood stem cells are preventive in nature, with potential curative applications for life-threatening diseases – The processing, testing, cryopreservation, and eventual release for transplantation constitute integral components of healthcare aimed at future diagnosis, treatment and care – Further, the appellant is also actively involved in post-transplant monitoring, clinical trials (including those for spinal cord injuries), and collaborations with international medical experts – Their services also support research on conditions like autism and cerebral palsy – Recognition under the Drugs and Cosmetics Act (post-amendment dated 17.12.2012) reinforces their status as a legitimate healthcare provider – The Department contends that the appellant’s services were exempted only from 17.02.2014 under Entry 2A of the 2014 Notification – However, the insertion of Entry 2A does not curtail the scope of Serial No.2 under the 2012 Notification – The absence of express inclusion of cord blood services in earlier notifications does not alter their essential healthcare nature – Also, the Ministry of Health and Family Welfare, through a 2013 Office Memorandum clarified that stem cell banking is a part of “health care services” and qualifies for exemption – Appellant’s services fall within the ambit of “Healthcare Services” as defined under the exemption notification – These services are preventive and curative in nature and encompass diagnosis, treatment, and care – Further, show cause notice issued by the Department is time-barred therefore, the imposition of penalties is not warranted – Moreover, during the course of investigation, the appellant deposited Rs.40,00,000/- – However, on facts, imposition of penalties and interest are unsustainable in law – Impugned order set aside, deposit of Rs.40,00,000/made by the appellant to be refunded – Service Tax Rules, 1994. [Paras 6, 11.2, 11.4, 11.5, 11.8, 12, 13, 13.2, 14] Finance Act, 1994 – s.73 – Invocation of extended period of limitation, when not justified – The disputed period is from 01.07.2012 to 16.02.2014 however, show cause notice was issued after more than three years only on 28.07.2017, demanding a sum of over Rs.2 crores towards service tax, by invoking the extended period of limitation: Held: U/s.73(1), a show cause notice must ordinarily be issued within one year from the relevant date – Proviso to s.73(1) allows an extended period of up to five years only where the non-payment or short payment of service tax is due to fraud, collusion, wilful misstatement, suppression of facts, or contravention of the provisions of the Act or Rules, with an intent to evade payment of service tax – Thus, for the department to invoke the extended period of limitation, there must 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 – Services rendered by the appellant were not exempt from service tax until the 2012 Notification was issued – Appellant was under a bona fide belief that the activity of enrolment, collection, processing, and storage of umbilical cord blood stem cells fell within the scope of exempted “Healthcare Services” and therefore, was not liable to service tax – Nothing on record to suggest that the appellant suppressed any material facts – On the contrary, they responded promptly to departmental communications and even deposited a sum of Rs.40,00,000/- during the investigation – In the absence of fraud, collusion, wilful misstatement, or suppression of facts with an intent to evade payment of service tax, the invocation of the extended period of limitation u/s.73 was wholly unwarranted – Mere non-payment of service tax, by itself, does not justify the invocation of the extended limitation period – Thus, show cause notice issued by the department is time-barred. [Paras 9, 9.2-9.4] Notification/Circular – Notification No. 4/2014-ST dtd.17.02.2014 issued by the Ministry of Finance – Clarificatory in nature – Operation of notification, prospective – Finance Act, 1994. [Paras 10.1, 10.2]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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