Custom, Excise & Service Tax Tribunal
Gurgaon I vs Ms M S D Pharmaceuticals Pvt Ltd on 30 September, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Service Tax Appeal No. 61833 of 2018
[Arising out of Order-in-Appeal No. 87/ST/CGST/APPEAL-GURUGRAM/SG/2018-19
dated 25.07.2018 passed by the Commissioner (Appeals), CGST, Gurugram,
Haryana]
Commissioner of Central Excise and ......Appellant
Service Tax- Gurugram-I
Plot No.36-37, Sector-32, Gurugram,
Haryana-122001
VERSUS
M/s MSD Pharmaceuticals Pvt. Ltd. ......Respondent
6th & 7th Floor, Tower-B, Vatika Towers, Sector-54, Gurguram, Haryana-122002 APPEARANCE:
Shri Goverdhan Dass Bansal and Ms. Amita Gupta, Authorized Representatives for the Appellant Shri Ashwini Chandrasekaran, Advocate for the Respondent CORAM: HON'BLE MR. S. S. GARG, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. 61459/2025 DATE OF HEARING: 30.09.2025 DATE OF DECISION: 30.09.2025 P. ANJANI KUMAR:
M/s MSD Pharmaceuticals Pvt. Ltd., the respondents, are engaged in conducting clinical trials, including clinical research and development related services etc. for Merck Group under an Agreement dated 01.04.2006 which was revised from 01.01.2012; the
2 ST/61833/2018 respondents classified the services under 'Technical Testing and Analysis Services' under Section 65(105)(zzh) and claimed exemption. Revenue entertained an opinion that the respondents were neither a 'Clinical Research Organization' (CRO) nor a CRPO as approved by Drug Controller General of India and therefore not eligible to avail the exemption; various show cause notices dated 16.05.2014, 22.04.2015, 16.04.2006 were issued, covering the period 2012-13 to 2014-15 demanding service tax on 'Business Support Services' and 'Business Auxiliary Services'; the show cause notices were adjudicated vide OIO dated 19.03.2018 by the Joint Commissioner. On an appeal filed by the appellants, learned Commissioner dropped the proceedings vide Order dated 25.07.2018 relying on the decision of the Delhi Bench of the Tribunal in their own case - 2019 (20) GSTL 566 (Tri. Del.). Revenue is in appeal against the same.
2. Learned Authorized Representative for the Revenue reiterates the Grounds of Appeal.
3. Learned Counsel for the respondents submits that the issue is no longer res integra. Tribunal in the above cited order held that the services rendered by the respondents are clearly covered by the exemption granted by various notifications; the Civil Appeal filed by the Revenue against the Tribunal's order was dismissed by the Hon'ble Supreme Court on monetary grounds. He takes us through the Notification Nos.11/2007 dated 01.03.2007 and 25/2012 dated 20.06.2012 and submits that the only condition that are required to be fulfilled to avail the Notification is that the service should be in the 3 ST/61833/2018 nature of technical testing or analysis and the service should be provided by CRO. He submits that they fulfil the conditions. He further submits that the services rendered by them do not qualify to be 'Business Support Services' or 'Business Auxiliary Services' as clarified by CBIC Letter no.334/04/2006-TRU dated 28.02.2006. He further submits that the services provided by the respondents qualify as export of services. He relies on the following cases:
MSD Pharmaceuticals Pvt. Ltd. vs. Commr. of S.T., Delhi-I 2019 (20) G.S.T.L. 566 (Tri.-Del) Veeda Clinical Research Ltd. vs. Pr. Commissioner, CGST, Ahmedabad (2025) 26 Centax 435 (Tri.-Ahm) Commissioner of Central Excise and Service Tax, Delhi vs. Glaxo SmithKline Asia Pvt. Ltd. (2024) 15 Centax 307 (Tri.-Chan) Apotex Research Pvt. Ltd. v. CCE Bangalore 2022 (63) G.S.T.L. 99 (Tri.-Bang) Union of India vs. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) G.S.T.L. 401 (S.C.)
4. Heard both sides and perused the records of the case. We find that the issue came up before the Principal Bench in the case of respondents themselves. The Bench observed as under:
7. We have heard both the sides and perused the appeal record. The Original Authority clearly recorded that SIRO and the appellant have entered into an agreement with M/s. Merck, USA. It is also recorded that the appellant, in terms of the said agreement, will coordinate clinical status in addition to conducting clinical studies. We have also perused the details of various activities undertaken by the appellant. The appellants were engaged in finalizing the testing protocol, training the staff for trial, applying and obtaining approval of DCGI, import of drug to be tested in India, monitoring the protocol, finance management, reporting adverse developments, documentation and archival of the said document of the final reporting to M/s. Merck, USA and DCGI. SIRO were also involved in activities in the said clinical trial. These activities are 4 ST/61833/2018 initiation of trial sites, monitoring, trial monitoring, site management, query response and coordinate with M/s.
Merck, USA etc. Perusal of these details clearly reveal that the appellant are directly engaged in the activities of conducting clinical trial studies. They did obtain no objection approval from the concerned drug authorities in India. In the face of such factual details, we find that the findings recorded in the impugned order is neither factually nor legally tenable. The appellant's activities are clearly covered by the exemption under Notification No. 11/2007-S.T., dated 1-3-2007.
8. Considering also the alternate argument of the appellant, we note that these services are in fact provided in terms of agreement with M/s. Merck, USA who paid the consideration in convertible foreign exchange. The beneficiary of service as per the terms of the agreement is M/s. Merck, USA. Following the ratio of the decision of the Tribunal in Paul Merchants Ltd. (supra) it is clear that these services are for delivery and consumption of an entity located outside India. On this ground also, the appellant is having a case on merits.
5. In view of the above, we find that nothing survives in the appeal and therefore, the appeal is dismissed.
(Operative part of the order pronounced in the open court) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) PK