1. The appellants herein run "SAMPLE COLLECTION CENTRES" for specialised laboratories like Dr. Lal PathLabs Pvt. Ltd., New Delhi, M/s Speciality Ranbaxy Ltd. They maintain the collection centre, draw/collect samples, process the samples to the extent required and forward (through courier service etc.) the samples to the test laboratories. The relationship with the principal is covered by Agreement. The basic terms are that the collection centres would have facilities and trained employees for drawal of blood samples, will carry out the essential processing (serum separation) of blood and forward the samples to the principals through curriers. The collection centres are also responsible for the disposal of waste arising in the process. The test charges are collected by these Centres at the rates stipulated by the test laboratories. The collection centres are paid a percentage (25% etc.) for the service rendered by them.
2. Under the impugned orders, it has been found that the services rendered by these collection centres are "Business Auxiliary Services" which attract service tax. Tax demands remain confirmed on that basis.
The orders rejected the contention of the appellants that their services were actually "Technical Testing and Analysis Service" or part of those services and remain excluded from the levy under the relevant heading.
3. We have heard the learned Counsel for the appellants and learned SDR and have perused records.
4. As already noted, the dispute is whether the service rendered by the collection centres is Business Auxiliary Service or Technical Test and Analysis services. We may reproduce the relevant taxing provisions before taking up the issue for discussion: (106) "Technical testing and analysis" means any service in relation to physical, chemical, biological or any other scientific testing or analysis of goods or material or any immovable property but does not include testing or analysis in relation to human beings or animal.
(19) "business auxiliary service" means any service in relation to, - (i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) Promotion or marketing of service provided by the client; or (iv) Any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services, and includes services as a commission agent, but does not include any information technology service.
5. The contention of the learned Counsel is that testing starts with drawal of sample and thus, forms an essential and integral part of testing. It is being submitted that since definition of "technical testing and analysis" under Clause (106) "does not include testing or analysis in relation to human beings or animal", the testing service rendered by the appellant is excluded from service tax. Learned Counsel for Ludhiana Collection Centre for Dr. Lal PathLabs Pvt. Ltd. has pointed out that the Commissioner has noted in the impugned order that what the appellant does "may also be essential part of testing and analysis procedure carried out at parent company's lab.;" but has incorrectly held that the activity carried out by the appellant amounts to promotion or marketing of service provided by the client M/s Dr. Lal PathLabs, New Delhi and is covered under Section 65(19)(ii) of the Act as defined therein during the relevant period". The point made is that the finding is contrary to the factual position noted. The contention is that a service cannot simultaneously be part of testing and analysis, and "promotion or marketing of service".
6. Learned Counsel would also submit that a service that has been specifically listed (technical testing and analysis) under one heading, cannot be subjected to tax under another heading (Business Auxiliary Service) simply because that service remains excluded from levy under the relevant heading. It is being pointed out that such an approach would be contrary to the legislative scheme.
7. Supplementing the legal position canvassed on behalf of the collection centre for Dr. Lal PathLabs. Pvt. Ltd., the learned Counsel for the collection centre of Speciality Ranbaxy Ltd. would contend that even if drawal of blood sample did not form part of "technical testing and analysis service", no levy would be attracted in view of the expanded scope conferred on that service through its definition under the statute. His emphasis is that "technical testing and analysis service" would cover not only the services strictly and narrowly falling within the ambit of those services; but also "any service in relation to" those services in view of the definition. It is being contended that services that are ancillary or auxiliary or connected to the specified services (technical testing and analysis) would also fall within the scope of the specified services in view of the broad sweep of the language used in the definition. The submission of the learned Counsel is that as there could be no dispute that drawing of blood sample is an essential step for testing the sample, it has to be treated as, auxiliary and integrally connected to testing and analysis service, (even if not treated as forming part) and thus, a service "in relation of testing". The contention is that since the definition covers "any service in relation to testing" and the levy "does not include testing or analysis in relation to human beings or animals", the drawing of sample should also be treated as not included in the levy under technical testing and analysis service.
8. Learned SDR would contend that testing of sample is an entirely separate activity from drawing of samples of materials to be tested.
According to him, test samples can be drawn by any competent person and sent to the testing laboratory but the process related to testing starts only after the sample is received in the test and analysis laboratory. To this, the appellants' reply is that, if not the rest, the serum separation carried out by them, would form part of testing and analysis.
9. With regard to the scope of the levy on testing and analysis service, the contention of the learned SDR is that since "testing or analysis" in relation to human beings or animal is excluded from the scope of the levy through statutory definition, any testing or analysis in relation to human beings or animal should be treated as outside the purview of levy under that heading and would attract service tax, if that activity fell under any other taxable service under the statute.
It is the contention of the learned SDR that since the present appellants carry out advertisements for their clients by keeping their board etc. and sell the services by raising bills, it is clearly a promotion or marketing service and would attract levy accordingly. He would also submit that Sub-clause (iv) in the definition of 'business auxilliary service' specifically includes 'any incidental or auxiliary support service'. The point emphaised is that since the appellants perform many services incidental to the testing and analysis service such as collecting samples, billing, supplying test reports, they clearly come within the scope of levy as "any incidental or ancillary support service".
10. With regard to the contention of the appellant that all services 'in relation to' technical testing and analysis service are also excluded from the service tax, the contention of the learned SDR is that the service should form part of technical testing and service to be in relation to that service. It is his contention that since drawing of sample has no connection with test per se, it cannot be treated as "in connection with" the test.
11. There is no dispute that testing and analysis carried out in the specialised laboratories constitute "technical testing and analysis service" contemplated under the law. Those laboratories are also not subjected to, including in relation to the drawing of blood samples, service tax, treating those tests and analysis as relating to human beings. The services rendered by the appellants - drawing, processing and forwarding of samples - is integral to the testing of those samples. As already noted, one of the impugned orders has also noted that the drawing of test samples may form part of test and analysis.
All the same, they are being subjected to tax on the plea that those services are separate from the scope of testing and analysis service and are taxable as business auxiliary service. This approach is hard to understand. There could be no denying that in the absence of drawing of blood samples, there can be no testing. Further, even if the two services are seen as entirely separate and different services, drawing of sample and initial processing of the same are, clearly, connected or incidental or ancillary to testing and analysis. We have already reproduced the definition of technical testing and analysis service in para 4 of this order. That definition is very broad in its scope. It covers "any service in relation to testing and analysis service". Thus, drawing of samples will come within the scope of the definition. The dispute as to whether drawing of sample forms part of testing and analysis service is not relevant in view of the sweeping nature of the definition. If the service is 'in relation to' testing, the service will get classified under technical testing and analysis. It is inconceivable that 'relationship' of sample drawing and initial processing to testing can be denied. The relationship may be incidental or auxiliary. Whichever way it is, its connection to testing and analysis service is clear, integral and undeniable. Thus, in the factual situation of the case, and the broad scope of the definition, definitely bring the services renders by the collection centres within the scope of technical testing and analysis service.
12. It is well settled that once there is a specific entry for an item in the tax code, the same cannot be taken out of that specific entry and taxed under any other entry. In the present case, revenue is seeking to discard the specific entry and to bring the appellants' services under a very general entry, only because under the specific entry no tax is payable. This approach is contrary to the scheme of the legislation. What is specifically kept out of a levy by the legislature cannot be subjected to tax by the revenue administration under another entry.
13. There is also no substance in the learned SDR's contention that since through definition, testing in relation to human beings or animal is excluded from the levy, those tests and analysis are liable to be taxed under some other general heading. Legislature has specifically recognised technical testing and analysis as a separate service for the purpose of levy. As to how the technical test and analysis are to be taxed under that heading is also for the legislature to decide. In the present case, through definition, the legislature has excluded "testing or analysis of human beings or animal" outside the levy. The definition clearly states the legislative intention not to impose any tax on such excluded technical testing and analysis. If the legislature had any intention to tax the testing or analysis in relation to human beings or animal at a different rate than other technical test and analysis service, the legislature would have separately specified the levy. In the present case, clearly the intention of the legislature is not to impose any levy at all on testing or analysis of human beings or animals. Therefore, the contention of the learned SDR to the contrary is not a legally correct view.
14. The services rendered by the appellants herein also do not seem to fall under any category specified in the definition of 'business auxiliary service'. The agreements make it clear that the appellants are not engaged for promotion or marketing of testing and analysis service. The appellants' business is organised for drawal of samples and for processing and forwarding of those samples. They are also not in the business of marketing or business promotion. Their expertise, through technical staff (Phlebotomy) is for rendering service in connection with human blood testing. Similarly, equipment available are for drawing, processing and preserving of samples. Thus, clearly, the appellant cannot come under serial No. (ii) of business auxiliary service. Serial No. (iv) brings "any incidental or auxiliary support service" within the scope of business auxiliary service. Type of services covered therein are illustrated in the definition - "billing, collection or recovery of cheques, accounts and remittance" etc. The drawing of sample and processing and forwarding of such samples are not in the same genre as any of the illustrative services mentioned under serial No. (iv). Serial No. (iv) makes it clear that only incidental or auxiliary support services such as the ones mentioned therein would fall within the definition. As already noted, the services provided by the appellants do not come within the categories of services mentioned in the definition, therefore, these services cannot fall within serial No. (iv).
15. In the result, we hold that the service tax demands made against the appellants are not sustainable. Accordingly, the impugned orders are set aside and the appeals are allowed with consequential relief to the appellants.