Clinical trial support service, not intermediary or taxable trial service, where the respondent only arranged and monitored studies.

The respondent's work connected with clinical trials in India was treated as support service for the overseas principal, not as taxable clinical trial service or intermediary service. The arrangement showed that the respondent did not itself conduct trials and lacked the human and infrastructural capability to do so; instead, it identified hospitals and doctors, arranged and financed studies, obtained regulatory permissions, and reported progress to the foreign principal. The actual trials were carried out by hospitals and doctors as investigators under the Drugs and Cosmetics Rules, 1945 and Schedule Y. On these facts, no tripartite intermediary arrangement was established and the demand could not proceed.

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Issues: (i) Whether the respondent's activity in relation to clinical trials in India constituted clinical trial services or merely support services, and whether it could be treated as intermediary service or export of service.

Analysis: The agreement and surrounding documents showed that the respondent did not itself conduct clinical trials, lacked the human and infrastructural capability to do so, and was engaged to identify hospitals and doctors, arrange and finance the studies, obtain regulatory permissions, and keep the overseas principal informed of the progress and reports. The clinical trials were actually performed by hospitals and doctors acting as investigators under the Drugs and Cosmetics Rules, 1945 and Schedule Y, while the respondent functioned as sponsor and support provider. There was no tripartite arrangement needed to characterise the activity as intermediary service. On these facts, the demand could not proceed on the footing that the respondent had rendered clinical trial services in India.

Conclusion: The activity was held to be support service to the overseas principal and not intermediary service or taxable clinical trial service as alleged; the Revenue's appeal failed.

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