2020 (4) TMI 871 - AAR - GST

HLA testing services by overseas laboratories on Indian samples qualify as exempt healthcare services under GST

AAR Karnataka held that Human Leukocyte Antigen (HLA) testing services performed by overseas laboratory on human buccal swabs sent from India qualify as ... Health care services by a clinical establishment - clinical establishment - exempt supply - reverse charge - testing / diagnostic service as integral to treatmentHealth care services by a clinical establishment - clinical establishment - exempt supply - reverse charge - testing / diagnostic service as integral to treatment - Whether HLA Typing services procured by DKMS BMST Foundation India from an overseas laboratory qualify as 'health care services by a clinical establishment' and are therefore exempt from IGST and not taxable in the hands of the applicant under reverse charge. - HELD THAT: - The Authority found that HLA typing is a diagnostic service aimed at identifying donor alleles to enable transplantation and is analogous to blood-group testing; it is performed as a pre-requisite for treatment of blood cancer and other blood disorders and has no other clinical purpose. The definition of 'health care services' in Notification No.12/2017-Central Tax (Rate) includes services by way of diagnosis for illness and the definition of 'clinical establishment' includes places established to carry out diagnostic or investigative services of diseases. An institution performing the investigative HLA tests therefore falls within the definition of a 'clinical establishment' and the service falls within 'health care services by a clinical establishment.' Entry No.77 of Notification No.09/2017-Integrated Tax (Rate) grants nil rate (exemption) to such services. Because the service itself is exempt under the entry cited, the recipient is not liable to discharge IGST on the said service under the reverse charge mechanism. The Authority declined to determine the place of supply, observing that determination of place of supply was outside its mandate. [Paras 13, 14, 15, 16, 17]HLA Typing services received by the applicant from the overseas laboratory are 'health care services by a clinical establishment' and are exempt from IGST; consequently the applicant is not liable to pay IGST on such services under reverse charge.Final Conclusion: Advance ruling: HLA Typing services procured by DKMS BMST Foundation India from the overseas laboratory qualify as exempt health-care services provided by a clinical establishment and are not taxable in the hands of the applicant under the reverse charge mechanism. Issues Involved:1. Whether the HLA Typing Services obtained by the applicant from LSL DE falls under the scope of “health care services by a clinical establishment” and thereby exempt from IGST.2. Whether the applicant is liable to pay Integrated Goods and Services Tax on the testing services performed by the overseas laboratory outside India on the Human Buccal Swabs sent by DKMS BMST from India.Issue-Wise Detailed Analysis:1. Classification of HLA Typing Services as Health Care Services by a Clinical Establishment:The applicant, a not-for-profit organization, facilitates blood stem cell donations to treat blood cancer and other disorders. They send buccal swabs from potential donors to LSL DE in Germany for HLA Typing, a prerequisite for organ transplantation.- Health Care Services Definition: As per Notification No. 12/2017-Central Tax (Rate), “health care services” include diagnosis, treatment, or care for illness, injury, deformity, or abnormality in any recognized system of medicine in India.- Clinical Establishment Definition: The notification defines “clinical establishment” as any institution offering diagnosis or treatment services for illness or abnormalities.The HLA Typing identifies potential donors for transplantation, akin to blood group testing. It is essential for matching donors with recipients, thus directly related to the treatment of illnesses like blood cancer. The service is provided by LSL DE, which performs diagnostic services, classifying it as a clinical establishment.Ruling: The services obtained by the applicant from LSL DE in the form of HLA Typing Services are categorized as “health care services provided by a clinical establishment” and are exempt from IGST under Entry No. 77 of Notification No. 09/2017-Integrated Tax (Rate).2. Tax Liability on Testing Services Performed by Overseas Laboratory:- Import of Services: Defined under Section 2(11) of the IGST Act, import of services requires the supplier to be outside India, the recipient in India, and the place of supply in India.- Place of Supply Determination: As per Section 13(3) of the IGST Act, for services requiring physical availability of goods (samples), the place of supply is where the services are performed, i.e., Germany in this case.The applicant argued that since the testing services are performed outside India and the samples are physically sent to Germany, the place of supply is outside India, and thus, the services are not taxable under GST.Ruling: The service of HLA Typing received by DKMS BMST Foundation India from the overseas laboratory is exempt from IGST as it falls under “health care services by a clinical establishment.” Consequently, the applicant is not liable to pay IGST on these services under the reverse charge mechanism.Conclusion: The Authority ruled that the HLA Typing services received from LSL DE are exempt from IGST as they qualify as health care services provided by a clinical establishment. Therefore, DKMS BMST Foundation India is not liable to pay IGST on these services under the reverse charge mechanism.