By TIOL News Service

MUMBAI, FEB 27, 2017: THE appellant, through one of its departments, namely Global Clinical Organisation are engaged in rendering services in relation to clinical trials of newly developed drugs on human participants under the category of "Technical Testing & Analysis Service” to the appellant's affiliate companies located outside India. Such services were rendered by the appellant during the period of May 2006 to February 2007.

CERA pointed out that service tax is payable on the said services rendered by the appellant. Accordingly, the appellant paid ST of Rs.62,97,547/- with interest of Rs.11,71,637/- on 01.01.2009.

After learning of the decision of the Tribunal dated 04.11.2009 in the case of B. A. Research India Ltd., 2009-TIOL-1981-CESTAT-AHM the appellant filed a refund claim of the amounts paid.

The lower authorities rejected the claim on the following grounds -

(i) The refund claims are filed beyond the period of one year from the date of payment.

(ii) The exemption for tax on clinical trials was granted under notification No. 11/2007-ST which came into effect from 01.03.2007, and the period involved in this case is prior to the issuance of notification.

In appeal before the CESTAT, the appellant submitted that -

+ Question of limitation does not apply as the refund is filed u/s 11B, Clause (B) (ec) of CEA, 1944, inasmuch as refund claim is filed within one year from the date of CESTAT order in B. A. Research India Ltd. - 2009-TIOL-1981-CESTAT-AHM delivered on 4th November 2009;

+ They had never sought the refund of the tax paid claiming the benefit of notification No. 11/2007-ST.

The Bench inter alia observed -

++ On perusal of records we find that in the refund claims, appellant had not mentioned anything about claiming exemption under Notification 11/2007-ST; first appellate authority has erroneously recorded the findings on extending the benefit of notification; findings being extraneous to the issue in hand are struck down.

++ Provisions of Section 11B Clause (B) (ec) cannot be applied in this case as Section 11B has to be read holistically; which would mean that every refund claim filed has to be considered in terms of provisions and this refund claim of appellant being not in dispute before any higher judicial authority, Section 11B Clause (B) (ec) will not get attracted. On the question of refund claims being time barred we find that findings of lower authorities are acceptable.

Holding that the appeal is devoid of merits, the same was rejected.

(See 2017-TIOL-599-CESTAT-MUM)