Place of Supply: pre clinical R&D and testing services treated as export when results are used abroad; clarificatory notification applies retrospectively.

Pre clinical R&D and testing services where the report/results are received and used by a foreign recipient qualify as export of services governed by the place of supply rule placing recipient location under Section 13(2), and related show cause notices and portions of the assessment order were quashed. The Notification dated 30.09.2019 issued pursuant to GST Council recommendations is declaratory/clarificatory and operates retrospectively to benefit exporters for the subject period. Samples supplied by foreign recipients that are consumed in testing and are not marketable commodities do not convert the services into supply of goods under the marketable commodity branch and do not displace export treatment.

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Issues: (i) Whether the impugned show cause notices and Order-in-Original charging GST/service tax on pre-clinical R&D and testing services exported by the petitioner could be quashed on the ground that such services qualify as export of services under Section 13(2) of the IGST Act, 2017 and related provisions; (ii) Whether Notification dated 30.09.2019 (and analogous clarificatory measures) is clarificatory and operates retrospectively so as to benefit the petitioner; (iii) Whether samples/reference materials supplied by foreign recipients constitute "goods" attracting Section 13(3)(a) of the IGST Act thereby displacing Section 13(2).

Issue (i): Whether the impugned notices and order charging GST/service tax on the petitioner's pre-clinical R&D and testing services exported to foreign recipients are liable to be quashed.

Analysis: The Court examined the nature of the petitioner's services (pre-clinical trials, testing and reporting) and applied the IGST framework that treats place of supply as the location of the recipient under Section 13(2) except where specific sub-clauses apply. The Court compared Section 13(2) with Section 13(3)(a), considered the GST Council recommendations and the text and purpose of Notification dated 30.09.2019, and reviewed prior authorities and analogous service-tax rules to determine whether the services are exports when the recipient is outside India and the report/result is sent abroad. The reasoning distinguished mere physical performance in India from the effective completion and use of results by the foreign recipient, and relied on the intention behind the notification and GST Council deliberations to treat these services as exportable.

Conclusion: In favour of the assessee. The impugned show cause notices and the portions of the Order-in-Original challenging export character of the petitioner's services are quashed to the extent specified.

Issue (ii): Whether Notification dated 30.09.2019 (and related clarifications/council recommendations) is clarificatory and therefore retrospective in operation so as to apply to the subject periods.

Analysis: The Court applied principles of retrospectivity for clarificatory/declaratory measures, considering legislative intent, GST Council minutes, and authorities on declaratory amendments and beneficial circulars. The Court found the notification issued pursuant to GST Council recommendations to be clarificatory/elucidatory as it clarified the place of supply for specified R&D services and remedied an uncertainty disadvantaging exporters. Precedent and statutory interpretation principles were applied to conclude that such clarificatory notifications operate retrospectively to the subject period indicated.

Conclusion: In favour of the assessee. The notification and related clarificatory measures operate retrospectively and entitle the petitioner to the benefit for the relevant earlier periods.

Issue (iii): Whether samples/reference materials supplied by foreign recipients are "goods" under Section 13(3)(a) of the IGST Act such that the place of supply is the location where services are performed (India), thereby defeating export status.

Analysis: The Court applied the statutory text of Section 13(3)(a), the CBEC/service-tax guidance distinguishing services that require goods to be physically available, and the concept of "marketable commodity". It found that the sample materials used in pre-clinical R&D are consumed in testing and are not marketable commodities at the time of testing; completion of the service is tied to the overseas recipient receiving and using the report. The GST Council's deliberations and analogous service-tax rules supported treating such samples as not bringing the services within Section 13(3)(a).

Conclusion: In favour of the assessee. Samples/reference materials in the petitioner's activities do not attract Section 13(3)(a) so as to displace Section 13(2); the services qualify as export of services when other export conditions are met.

Final Conclusion: The writ petitions are partly allowed: the impugned show cause notices dated 29.09.2023 and 18.12.2024 and the portions of the Order-in-Original dated 28.03.2024 specified in the order have been quashed, thereby granting substantive relief to the petitioner on the export character and retrospective applicability of the clarificatory notification; other aspects not specifically quashed remain open as per the order.

Ratio Decidendi: A clarificatory notification issued pursuant to GST Council recommendations that clarifies the place of supply for specified R&D/testing services is declaratory in nature and operates retrospectively; where samples used in testing are not marketable goods and services are effectively used and enjoyed outside India, Section 13(2) of the IGST Act, 2017 governs and such services qualify as export of services.

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