2018 (7) TMI 275 – CESTAT NEW DELHI – TMI – Technical testing and analysis services – clinical trial to new drugs for various manufacturing companies (sponsors) – Benefit of N/N. 11/2007 ST dated 01.03.2007 and a subsequent N/N. 25/2012 ST dated 20.06.2012 – Department formed an opinion that respondent are participating in various drug trials in the capacity of trial site, in as such, their activity is not exempted vide the said Notification – Held that:- Perusal of both these Notifications makes it a mandate that the exemption is for such technical testing and analysis service as are provided or to be provided by a Clinical Research Organisation approved to clinical trials by the Drug Controller General of India. Thus, it becomes clear that the claimant of exemption of this Notification should be a Clinical Research Organisation.
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The Commissioner has held the respondent as a CRO despite the apparent fact that as per the mandatory contracts for the purpose to be entered into by
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trix is that M/s Diabetes Thyroid Hormone Research Institute Pvt. Ltd. (DTHR) is performing clinical trial to new drugs for various manufacturing companies (sponsors). The said activity was opined to be covered under the category of technical testing and analysis services as defined under Section 65(106) of the Finance Act, 1994. However, vide Notification No. 11/2007 ST dated 01.03.2007 and a subsequent Notification No. 25/2012 ST dated 20.06.2012, such services are exempted from Service Tax on the services provided or to be provided by the technical research organization approved to conduct clinical trials by the Drug Controller General of India. On the basis of various contracts of the respondent herein, the Department formed an opinion that respondent are participating in various drug trials in the capacity of trial site, in as such, their activity is not exempted vide the said Notification. Resultantly, Show Cause Notice dated 04.10.2013 was served upon the respondents which was a
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to be strictly followed and according to those guidelines, any person, company or an organization who want to get any new drug molecule clinically examined and tested is the sponsor who has to apply in prescribed format with the Drug Controller General of India in a prescribed format, giving detail of the site, i.e., place / hospital / organization, where the trial will be conducted on the patient along with the name of the investigator and the principal investigator and the guidelines permit the existence of such organizations who manage the whole or some of the process of drug trial for a sponsor to be known as Clinical Research Organization (CRO). 3. It is impressed upon that from the respondent s own documents respondents are mentioned to be the trial site and director thereof is mentioned as the investigator or the principal investigator. Thus, their own documents falsify them to be a CRO. The same has miserably been ignored by the adjudicating authority. The order, therefore, suf
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rties and perused the records. Our considered opinion is as follows: (i) Since it is an admitted fact that the respondents are conducting clinical analysis as can be categorised as technical testing and analysis under Section 65(106) of the Act which is liable to Service Tax under Sub-clause ZZH of Section 65(105) of the Act, the moot question for consideration is as to whether the respondent are entitled for the benefit of Exemption Notification of 01.03.2007 and 20.06.2012. Perusal of both these Notifications makes it a mandate that the exemption is for such technical testing and analysis service as are provided or to be provided by a Clinical Research Organisation approved to clinical trials by the Drug Controller General of India. Thus, it becomes clear that the claimant of exemption of this Notification should be a Clinical Research Organisation. (ii) The CRO is defined in Clinical Practice Guidelines, as an organization to which the sponsor may transfer or delegate one or all of
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ch. It has also been emphasized by the adjudicating authority itself that it is only in its collective form that the Clinical Research Organisation comes into existence. Thus, findings in the order under challenge itself are very much differentiating a CRO than from a trial site. Still, the Commissioner has held the respondent as a CRO despite the apparent fact that as per the mandatory contracts for the purpose to be entered into by the sponsor, the respondents are mentioned as trial sites. Not only this, in addition thereto, the CRO is also named in the contract itself, i.e., J.S. Icon Clinical Research India Ltd. Once two different entities are apparent from the contract itself, distinguishing the respondent to be called as mere trial site with someone else as the CRO and the exemption of the impugned Notifications is available only to the CRO, the Commissioner (Appeals) has wrongly allowed the respondents to avail the said exemption. The order under challenge is, therefore, opined
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