Order Date - 14 July 2025 

Parties: M/s. Stemcyte India Therapeutics Pvt. Ltd. Vs Commissioner of Central Excise & Service Tax, Ahmedabad-III

Facts -

• The appellant, M/s. Stemcyte India Therapeutics Pvt. Ltd., a stem cell bank, was engaged in the enrolment, collection, processing, and storage of umbilical cord blood stem cells, was issued service tax demands for the period 01.07.2012 to 16.02.2014, treating these services as taxable, rejecting the appellant’s claim of exemption under “Healthcare Services” as per Notification No. 25/2012-ST.
• A show cause notice was issued in 2017 invoking the extended limitation period. The company deposited ₹40 lakhs under protest and sought a refund. The CESTAT upheld the demand, interest, and penalties.

Issue -

• Whether stem cell banking services qualify as “Healthcare Services” exempt and whether the show cause notice dated 28.07.2017 was time-barred?

Order -

• The Division Bench of the Hon’ble Supreme Court observed that 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 under Section 73 of the Finance Act, 1994 was wholly unwarranted. Mere non-payment of service tax, by itself, did not justify the invocation of the extended limitation period. Accordingly, the show cause notice issued by the department was clearly time-barred. On this ground alone, the impugned order was liable to be set aside.
• The Ministry of Health and Family Welfare, through an Office Memorandum dated 22.05.2013, had clarified, in consultation with the National AIDS Control Organization, that stem cell banking was a part of “health care services” and qualified for exemption. Thus, 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.
• The Court concurred with the decision of the Madras High Court to the extent that Notification No. 4/2014-ST could not be considered to be retrospective. However, it was of the considered opinion that the said amendment was indeed clarificatory. To this limited extent, the judgment in Life Cell International (P) Ltd. stood overruled in principle. Accordingly, the impugned order overlooked the comprehensive scope of the exemption and was, therefore, liable to be set aside.
• Accordingly, the appeals were allowed. The deposit of ₹40,00,000/- made by the appellant was directed to be refunded to them within a period of four weeks from the date of receipt of the judgment.