Export of Service

[Kaustubh Karandikar]

XYZ (France) wants to carry out ‘Clinical Trials’ in India. For carrying out clinical trials, certain statutory permissions are required to be obtained from the Indian Government. XYZ had appointed PQR(India) to give this Regulatory, Administrative and Legal framework support for getting the required permissions from the Indian Government. For this service, PQR(India) will be charging to XYZ(France) in foreign currency. Is PQR liable to pay GST on it?

[Ganeshan Kalyani]

GST is payable by PQR.

[KASTURI SETHI]

I support the views of Sh.Ganeshan Kalyani Ji. Case law is as under:-

2019 (7) TMI.43-AAR Maharashtra in the case of Applicant Bilcare Ltd.

[KASTURI SETHI]

Sir,

This decision is also worth reading.

2019 (20) G.S.T.L. 124 (A.A.R. - GST) : AAR Maharashtra,IN RE : BEHR-HELLA THERMOCONTROL INDIA PVT. LTD. = 2018 (11) TMI 887 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA

[Kaustubh Karandikar]

The transaction is satisfying all the conditions as per the definition of ‘Export of Services’ i.e.

1) The Supplier of service viz. PQR is located in India.

2) The recipient of service viz. XYZ is located outside India.

3) Since the transaction is falling under Section 13(2) of IGST Act, 2017, and the recipient of service viz. XYZ being outside India, the place of supply of service will be outside India.

4) payment for such service has been received by the supplier of service i.e. PQR in convertible foreign exchange.

5) XYZ and PQR are not branch and HO of same taxable person.

Therefore, to conclude, this being an export of service, PQR is not required to pay GST on it.

Shri Kasturi Ji and Ganeshan Ji, your views please on the above.

[KASTURI SETHI]

Dear Sir,

I wish other experts in the forum should opine to further clarify.

[Rajagopalan Ranganathan]

Sir,

Provision of Service of getting Regulatory, Administrative and Legal framework support for getting the required permissions from the Indian Government is provided by PQR within India (Txable territory) PQR has to pay gst on the service provided by them. Moreover the clinial trials are to be carried out in India. Therefore on both counts PQR is liable to pay gst.

[DR.MARIAPPAN GOVINDARAJAN]

The service will not amount to export of service and liable to GST.

[Madhavan iyengar]

Since GST being a destination based tax in this case where the services are getting consumed the services are consumed in india by the Recipient ie foreign party and not abroad hence going by this principle also gst will become applicable

experts please give your views on this line of thinking as this view is also important in many cases of export of services which have also been deliberated earlier in this forum and should be taken up with the judicial authority as this is one of the fundamentals of gst can one argue on these principles in other cases

[KASTURI SETHI]

Dear Sh.Madhavan Iyengar Ji,

Are you not satisfied with the decisions of AAR cited above ? Have you gone case laws thoroughly ?

AI Summary

Export of services: regulatory facilitation for foreign clinical trials may be GST-exempt, but place-of-supply and consumption tests are disputed. Whether regulatory, administrative and legal facilitation services provided in India to a foreign sponsor for clinical trials qualify as export of services depends on statutory export conditions (supplier location, recipient outside India, place of supply outside India, payment in convertible foreign exchange, and no branch/head-office relationship). One line of opinion treats the services as exported and GST-exempt; contrary views treat the services as supplied and consumed in India and therefore taxable, with reliance on place-of-supply and consumption principles and advance-ruling precedents.