TaxTMI 
TaxTMI 
2019 (6) TMI 1307
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.... At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question raised Background of the operations undertaken by CRL (i) The Applicant CRL (formerly known as B.A. Research India Limited), a global Clinical Research Organization, providing comprehensive range of clinical research and support services by performing technical testing and analysis on the Drug/lnvestigational Product provided by sponsors located outside India and submits final the report to such foreign sponsors. (ii) In India, the Applicant is registered as a public limited company under the Companies Act, 1956. The Applicant provides Clinical R....
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....ncy. Statement containing Applicant's interpretation of law in respect of the aforesaid question The Applicant would like to make the submissions before this Hon'ble Authority for Advance Ruling on the following grounds, amongst others, each of which is requested to be taken as the alternative and without prejudice to each other: A. The clinical Research services provided by the Applicant would amount to export of service : (i) The Applicant would like to submit that the clinical research services provided by them to the foreign sponsors would amount to export of service for the reasons detailed below. (ii) The term export of service has been defined under Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) to mean: "export of services" means the supply of any service when, - (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange I [or in Indian rupees wherever permitted by the Reserve Ba....
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.... of goods that are physically required to be made available by the recipient will be the location where the services are performed. (ix) In this regard, the Applicant would like to submit that Section 13(3)(a) of the IGST Act will be applicable only in those cases where a service in the nature of repair, testing etc.) is performed on the goods sent by the recipient to the supplier of service and not to those cases where the service is provided using the goods provided by the recipient or in cases where the goods sent by the recipient are altered (consumed) while providing the service. (x) The Applicant would like to rely on the decision of Hon'ble Mumbai Tribunal in the case of Principal Commissioner of C. Ex. Pune - I v Advinus Therapeutics Ltd. 2017 (51) S.T.R. 298 (Tri, - Mumbai) = 2016 (12) TMI 34 - CESTAT MUMBAI which has been decided specifically in the context of research and drug development using information provided by the recipient. Hon'ble Tribunal while detailing the applicability of Rule 4 of the Place of Provision of Service Rules, 2012. Has held: "It has been noted by the first appellate authority that the applicant for refund is in the business of re....
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....ollowing ingredients which crystallize an activity as 'export of service 'for the purposes of Rule 6A of Service Tax Rules, 1994, viz., that provider of service is in taxable territory, that recipient is outside India, that the service is not in the 'negative list', that payment is received in convertible foreign exchange and that the provider and recipient are not covered by the fiction in Explanation 2(b) of Section 65B(44) of Finance Act, 1994, are applicable to the service rendered by the respondent is common ground. The cavil is that the activity does conform to the provisions of Rule 4 of Place of Provision of Services, Rules, 2012 because the service is allegedly. 4 . ...provided in respect to goods that are required to be made physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service, in order to provide the service..' rendering the location of performance of service, i.e. India, to be pertinent to the activity of respondent. It is an admitted fact that the respondent had been rendering services that were, in the erstwhile pre-negative list regime, taxable but for the pr....
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....w industry of hiving out or outsourcing of what was, conceivably, being done within the enterprise was intended to be subject to the new levy. In the matter of service rendered by respondent, this activity could, but for commercial viability, will be executed by the recipient within its own organization or the territory in which it exists. The satisfaction of the customer occurs upon an outcome which is possessed by the recipient. Hence, even if some of the activities are carried out in India, by no stretch can it be asserted that the fulfilment of the activity is in India. Therefore, the inescapable conclusion is that the location of the actual performance of the service is outside India and, even with the special and specific provision of Rule 4 of Place of Provision of Services Rules, 2012, the performance of service being rendered outside India would render it to be an export. In this context, the legislative intent of incorporating a special and specific provision in Rule 4 may yield further insights. The special provision, which may be seen as an exception to the general Rule 3, deals with services in respect of goods as well as those provided to individuals....
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....ct intended to be plugged. It is obviously not intended to tax any activity rendered on goods as to alter its form because that would be covered by excise on manufacture or be afforded privileges available to merchandise trade. The provision itself excludes goods imported temporarily for repairs but that does not, ipso facto, exempt goods imported temporarily for repairs from taxability which would, by default, be predicated by the intent in Rule 3. Consequently a recipient in India would be liable to tax on such temporary imports for repairs while service to a recipient located abroad would not be taxable. This is in consonance with the privilege of exemption afforded to export of services. The special and distinct role of Rule 4 becomes clearer. Not intended to tax the activity of altering goods supplied by the recipient of service or for repairs on goods, Rule 4(1) of Place of Provision of Services Rules, 2012 would appear, by elimination of possibilities, to relate to goods that require some activity to be performed without altering its form. The exemplification in the Education Guide referred supra renders it pellucid. Certification is an important facet of trade and ....
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....s, solvents, compounds. Further, the Appellants are formulating the process of the manufacture of the new compounds and the process is being sent to their clients/service receiver. It is seen from the detail service agreement that the Appellants are engaged into converting compound 120 into compound 129." 5, In view of those principles emphasized time and again and reiterated as above, the appeal is devoid of merits and is accordingly rejected. The stay petitions are also disposed of." (xii) The Applicant would like to submit that the provisions contained in Section 13(3)(a) of the IGST Act is in pari materia with the provision contained in Rule 4 of the Place of Provision of Services Rules. Therefore the principles enunciated in the above judgements can be relied for understanding the scope of Section of 13(3)(a) the IGST Act. Relevant portion of Rule 4 of the lace of Provision of Services Rules, 2012 is reproduced for easy reference; "Place of provision of performance based services- 4. The place of provision of following services shall be the location where the services are actually performed, namely: (a) services provided in respect of goo....
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....under: "Q 1. What is Goods and Services Tax (GST)? Ans: It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer. Q.2 What exactly is the concept of destination based tax on consumption? Ans: The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply." [Emphasis Supplied] (ii) It is a settled principle of law that when the service is consumed outside India, tax is not leviable in India. Reliance in this regard can be placed on the following cases wherein it has been specifically held that even though the test has been conducted in India and the test reports were prepared in India, the service will be treated as export of service as the service is consumed outside India: a. Commissioner v B.A Research India Ltd 2010 (18) S.T.R. 439 = 2009 (11) TMI 213 - CESTAT, AHMEDABAD b. KSH Int....
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....ERNED OFFICER The submission, as reproduced verbatim, could be seen thus- "With reference to the above mentioned subject, Cliantha Research Ltd. (URD) filed application seeking Advance Ruling with reference to prospective tax liability on the Clinical Research Services proposed to be provided by it. Cliantha Research Ltd. (herein after referred to as the applicant) is a public limited company under the Companies Act, 1956 with its registered office at Ahmedabad Gujarat. It is clinical research organization and is involved in providing clinical research and support services to its clients located within India and outside India,. The clinical research services provided by the applicant involves conducting bio-equivalence studies, bio-availability studies, drug reactions, drug interactions etc. for newly developed drug formulations or for the existing ones. The applicant enters into agreement with the foreign clients and is needed to submit the product investigation report as per the terms and conditions of the agreement. The clinical trials and investigation studies are performed by the applicant on the individuals in India at their facilities. The products under inves....
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....quired to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services: Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs. (Refer Annexure Il) Comment: In case of the applicant the place of supply service is determinable as per Section 13 (3) (a) which clarifies that the place of supply of service in cases where the material used or consumed in the performance of service is supplied by the recipient of the service. In case of the applicant the materials consumed or used in the clinical trials is supplied (in physical form) by the recipients of the service moreover the applicant provides only service i. e. product investigat....
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.... submitted by the applicant, the 'Protocol Summary' is mentioned, salient features of which are mentioned as under:- a. Objectives: "to compare and evaluate the oral bio availability of Metformin HCI Extended Release Tablets 1000 mg with that of 'FORTAMET@ (Metformin HCI) Extended Release Tablets 1000 mg in healthy, adult, human subjects underfed conditions" We find that the Applicant will be providing Clinical Research (as mentioned in their application), in the form of comprehensive range of clinical research and support services to their clients (sponsors), by performing technical testing and analysis on the Drug/lnvestigational Product, provided by sponsors located outside India and submits final analyses report to such foreign sponsors. The Research (study) will be conducted on human subjects. Thus we find that the Research is for conducting a study of the effect of such Investigational Product/drug. It has also been submitted that the goods/ Investigational Product given by the sponsor will get consumed during the process of the study and is not returned back to the sponsor. After the completion of study, the applicant will supply the Sponsor with a copy of a deta....
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.... property,.......... The Applicant does not provide any of the services listed in the Section 13(5) (5) The place of supply of services supplied by way of admission to, or organisation of a cultural, artistic,........... The Applicant does not provide any of the services listed in the Section 13(6) (6) Where any services referred to in sub-section (3) or subsection (4) or sub-section (5)......... This Section is not applicable on the Applicant as he does not provide services listed in sub-section (3), (4),(5) explained above. 13(7) (7) Where the services referred to in sub-section (3) or sub-section (4) or sub-section 5 are supplied in more than one State............... This Section is not applicable on the Applicant as he does not provide services listed in subsection (3), (4),(5) explained above. 13(8) 8) The place of supply of the following services shall be the location of the supplier of services, namely:--- (a) services supplied by a banking company, ..... (b) intermediary services; (c) services consisting of hiring of means of transport, ......................... a. The Applicant does not provide services as s....
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....cant's contention that Section 13(3)(a) of the IGST Act will be applicable only in those cases where a service in the nature of repair, testing etc. is performed on the goods sent by the recipient to the supplier of service. The said section does not give any exemption to goods that are consumed in the process of research. The applicant have themselves submitted that the services of research are rendered by them in respect of the subject Drug/product, which are made available to them in India. Only when these drugs are received then they administer the same to their subject under certain conditions and observed the effect of the drugs on such subject and finally make research reports which are then sent to their sponsors. The Applicant has submitted that they are engaged by the sponsors only for the report and not for merely administering the drug and recording the results alone. This contention is flawed inasmuch as it is natural that in such cases the sponsors would like to know the efficacy of their drugs on subject and for which the testing of the drugs themselves are important. The entire administration of the drugs has to take place under controlled conditions and results hav....