2018 (10) TMI 303 - AAR - GST

Advance Ruling Authority rejects application on 'place of supply' for scientific testing services

The application by M/s. Lambda Therapeutic Research Limited was rejected by the Advance Ruling Authority due to its lack of jurisdiction to determine the ... Place of supply - export of services - zero rated supply - jurisdiction of Advance Ruling Authority - determination of liability to pay tax - advance rulingPlace of supply - jurisdiction of Advance Ruling Authority - determination of liability to pay tax - advance ruling - Whether the Advance Ruling Authority has jurisdiction to determine the place of supply (and therefore whether the activity qualifies as export of service and zero rated supply). - HELD THAT: - Section 97(2) of the CGST/GGST Acts circumscribes the matters which the Advance Ruling Authority may decide, listing items such as classification, applicability of notifications, time and value of supply, admissibility of input tax credit, determination of liability to pay tax, registration requirement and whether an activity constitutes a supply. The determinative requirement for treating a service as an 'export of services' includes that the place of supply is outside India. The question of 'place of supply' however is not among the matters enumerated in Section 97(2) as amenable to advance ruling by this Authority. As the Authority is a statutory creation and must act within the jurisdictional boundaries prescribed by the Act, it cannot decide questions on 'place of supply' which fall outside the enumerated heads. Consequently, the Authority is precluded from answering the applicant's query on whether the services amount to export of service/zero rated supply insofar as that determination requires a ruling on place of supply. [Paras 12, 13]Application rejected at admission stage for want of jurisdiction; the Authority lacks competence to decide the place of supply question and therefore cannot rule on export/zero-rated status.Final Conclusion: The application seeking an advance ruling on whether the applicant's scientific testing and technical analysis on pharmaceutical products constitutes export of service/zero rated supply is rejected for lack of jurisdiction of the Advance Ruling Authority to decide the question of place of supply. Issues involved:Determining whether the services of scientific testing and technical analysis on pharmaceutical products provided by an Indian company to foreign clients constitute 'export of service' under the IGST Act, 2017.Analysis:1. Jurisdiction of Advance Ruling Authority:The applicant sought a ruling on whether their services qualified as 'export of service' under the IGST Act, 2017. The authority's jurisdiction under Section 97(2) of the CGST Act, 2017 and GGST Act, 2017 is limited to specific issues, including the determination of liability to pay tax. The authority clarified that 'place of supply' falls outside its jurisdiction, rendering it unable to address the applicant's query.2. Definition of 'Export of Service':The definition of 'export of service' under Section 2(6) of the IGST Act, 2017 outlines criteria such as the location of the supplier and recipient, place of supply, and payment in foreign exchange. Notably, the place of supply being outside India is a crucial requirement for a service to qualify as an 'export of service.'3. Relevance of 'Zero Rated Supply':Section 16 of the IGST Act, 2017 defines 'zero rated supply' to include exports of goods or services. The issue at hand hinges on determining the 'place of supply' of the service provided by the applicant, emphasizing the importance of understanding where the service is deemed to be supplied.4. Authority's Limitation on 'Place of Supply' Determination:Despite the applicant's focus on the 'place of supply' in their request for an advance ruling, the authority highlighted that such a determination is beyond its purview as per Section 97(2) of the Acts. The authority's mandate does not extend to deciding issues related to the 'place of supply.'5. Precedent and Lack of Jurisdiction:Referencing a prior ruling by the Authority for Advance Ruling in New Delhi, which did not address the jurisdiction to decide the 'place of supply,' the current application was rejected solely due to the authority's lack of jurisdiction over this specific issue.In conclusion, the application by M/s. Lambda Therapeutic Research Limited was rejected based on the lack of jurisdiction of the Advance Ruling Authority to decide on the 'place of supply' concerning the provision of scientific testing and technical analysis services on pharmaceutical products to foreign clients. The rejection was made under the relevant provisions of the CGST Act, 2017 and GGST Act, 2017, emphasizing the authority's limited scope of jurisdiction as defined by the statutes.