Umbilical Cord Blood Stem Cell banking is a health service and thus will be exempted from indirect tax, Supreme Court ruled on Monday. This banking is a process of collecting, transporting, testing and then storing the same to make it available when required by the owner in future.
Though the ruling is related with pre-GST era and aimed at service tax exemption, experts say that same is expected to be applicable in GST era. In other words, services of Umbilical Cord Blood Stem Cell banking are likely to be exempted from GST.
The apex court took note of an office memorandum (OM), dated May 22, 2013 by Health Ministry. The OM clarified in consultation with the National AIDS control Organization that stem cell banking is a part of ‘health care services’ and qualifies for exemption. “It is evident that the 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,” a division bench of Justices J B Pardiwala and R Mahadevan said while disposing of a petition filed by Stemcyte India against order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
CESTAT in its order dated August 2, 2024, rejected the appeals filed by the company and upheld the orders passed by the lower authorities. It held that the services of enrolment, collection, processing, and storage of umbilical cord blood stem cells, provided by the appellant during the period from July 1, 2012 and February 16, 2014 do not fall within the scope of “Healthcare Services”. Consequently, the company was held liable to pay service tax on the said services along with interest and penalties.
‘Healthcare Services’
On September 21, 2012, the Association of Stem Cell Banks of India submitted a representation to the Health Ministry seeking clarification on whether the services rendered by stem cell banks qualified as ‘Healthcare Services’. In response, the Ministry pitched for exemption from service tax to be granted. Accordingly, the Finance Ministry issued a notification, dated February 16, 2014 and provided the exemption.
However, the company was asked by the Service Tax Department to pay the service tax for the period July 1, 2012 and February 16, 2014. The company did deposit ₹40 lakhs under protest and filed an appeal. When the CESTAT held the demand, the company moved the top court.
Source: The Hindu Business Line
