2018 (10) TMI 303 - AAR - GST

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

In Re: M/s. Lambda Therapeutic Research Limited

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 ... Maintainability of Advance Ruling Application - Section 97(2) of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 - services of scientific testing and technical analysis on pharmaceutical products - determination of ‘place of supply’ - whether the activities provided by the applicant will be treated as ‘export of service’ under the provision of the Integrated Goods and Services Tax Act, 2017 and will consequently fall under ‘zero rated supply’ as per Section 16 of the IGST Act, 2017? Held that:- The issue whether the activity of the applicant provided to foreign clients towards scientific testing and technical analysis services on pharmaceutical products which are supplied by an entity situated outside India would be treated as ‘export of service’ under the provisions of the IGST Act can be determined in light of various provisions of the IGST Act, 2017 including Section 2(6) which defines ‘export of services’ - Thus, one of the important requirements of supply of any service to be treated as ‘export of service’ is that the place of supply of service is outside India. The entire issue is intrinsically related to determination of ‘place of supply’ of service by the applicant. This authority has been constituted in exercise of the powers conferred by section 96 of the Gujarat Goods and Services Tax Act, 2017, which Act extends to the whole of the state of Gujarat. This authority is a creature of statute and has to function within the legal boundary mandated by the Act. As the ‘place of supply’ is not covered by Section 97(2) of the Acts, this authority is helpless to answer the question raised in the application, as it is lacking jurisdiction to decide the issues. The jurisdiction of this authority does not extend to the questions on determination of ‘place of supply’. The application for Advance Ruling of M/s. Lambda Therapeutic Research Limited is rejected, under sub-section (2) of section 98 of the CGST Act, 2017 and the GGST Act, 2017. 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.