AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 871
X X X X Extracts X X X X
X X X X Extracts X X X X
....r and other blood disorders by promoting awareness and encouraging people to register as a potential blood stem cell donors as well as facilitating the process of blood stem cell donations. 3. The applicant has sought advance ruling in respect of the following questions: 1. Whether in the facts and circumstances of the case, DKMS BMST Foundation India is liable to pay Integrated Goods and Services Tax on the Human Leukocyte Antigen (TILA') testing services performed by the overseas laboratory outside India on the Human Buccal Swabs sent by DKMS-BMST from India? Later at the time of personal hearing, he has modified the question and sought the advance ruling on the following questions: 1. from the overseas laboratory falls under the definition of health care services by a clinical establishment, thereby exempt from the tax leviable thereon and accordingly not taxable in the hands of DKMS-BMST/ Notwithstanding the outcome of Question 1, whether in the facts and circumstances of the case, DKMS BMST Foundation India ('IDKMS BMST') is liable to pay Integrated Goods and Services Tax on the testing services performed by the overseas laboratory outsid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r lives will be irrevocably changed. Some will need months of intensive therapies and others will need lifelong treatment. Studies suggest that India ranks 3rd highest in reported cases of Blood Cancer, after the US and China and affects more than 70,000 men and women in the country. This growing burden is a serious concern for public health administrators in India. f. The aim of DKMS-BMST is to improve the situation of patients suffering from blood cancer and other blood disorders in India and throughout the world, by raising awareness about blood stem cell transportation and registering potential blood stem cell donors. Blood cancers (like leukemia, lymphoma, myeloma, myelodysplastic syndrome and myeloproliferative disorders) is one of the most common cancers and affects the production of blood cells and their many functions, such as fighting off infections or preventing serious bleeding. Most of these cancers start in the bone marrow where blood is produced. g. The stages of blood cancer are divided on the basis of metastasis. There are different scales to determine different stages, according to the symptoms and rate of metastasis. Mainly the stages of blood c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cancerous cells; (d) Radiotherapy: using high energy rays to kill cancer cells in a particular area (mostly to treat lymphoma); (e) Surgery: rarely, the patient may be offered a splenectomy (removing of spleen). (ii) Non-intensive / low intensity treatment: Non-intensive treatments such as lower-dose chemotherapy are usually gentler and cause fewer side effects. In most cases, these treatments wont cure the cancer but they may help to keep the person in remission or manage his symptoms for a good length of time. These gentler treatments may be used over a longer period of time to keep cancer under control. Types of lower intensity treatment for blood cancer include: (a) Low dose chemotherapy: using cell-killing drugs with the aim of killing cancerous cells and stopping them from multiplying; (b) Some biological therapies / immunotherapies / monoclonal antibodies: drugs that encourage the patient's immune system to fight cancerous cells. i. Many patients suffering from blood cancer and other blood disorders need a blood stem cell transplant to survive. For a stem cell transplant, the primary step is finding a matching donor. Onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....creasing the awareness and on encouraging many more people in India to register as a potential blood stem cell donor. It maintains a register or database of donors, including but not limited to HLA typing data required for donor and patient matching. n. With the help of upsurge in the details of potential donors in the global database, the chances of patients finding a suitable match increases to a large extent, thereby, increasing the chances of blood cancer treatment. It is also pertinent to note than the entire purpose of the said database is assisting in treatment of patient's blood cancer and other blood disorders. o. After, a donor has been identified as a match, because, he/she has the same tissue type as a patient in need of a transplant, the applicant facilitates the process leading to blood stem cell donation. It provides comprehensive Post-donation support and monitors the short- and long-term health of adult unrelated volunteer donors who have provided hematopoietic stem cells. P. To allow a donor patient matching and facilitate the process leading to blood stem cell donation, the applicant procures certain goods and services from India/ outsi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by DKMS worldwide. On both platforms (WMDA and HAP-E Search), the donors from India are marked as DKMS India donors and linked to DKMS-BMST and the HLA testing conducted by LSL DE, DKMS-BMST maintains a register or database of donors, including but not limited to HLA typing data required for donor and patient matching which proves to be an extremely important database for a patient suffering from blood cancer or any blood disorder. (b) Facilitating the Blood Stem Cell Donation process: If the tissue type of a potential donor matches with that of a patient, the following services are provided by DKMS-BMST for potential donors: a. Confirmatory Typing (CT) and b. Work-Up (WU) process. Confirmatory Typing Service: The HLA of the potential donor has to be confirmed again using a blood sample, which is taken from the donor. The donor's HLA is again tested and re-confirmed. As part of the CT services, DKMS-BMST re-sends the buccal swabs of the said donor to LSL DE to reconfirm the tests before the transplantation and the results of the same are uploaded on DKMS One along with a doctor signed report. Invoices are raised by LSL DE to DKMS-BMST for such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or HLA-A, -B, -C,-DRB1, -DQB1 and -DPB1. In rare cases HLA class II results will be based on Exon-2 only (=peptide binding site). For class I in some cases additional sequences are added to achieve phasing of exons 2 and 3. Currently, more than 99% of HLA class I results (HLA-A, -B, -C) and HLA class II results (HLA-DRB1, -DQB1, - DPB1) can be delivered as high resolution results in accordance with NMDP criteria (null alleles determined by differences outside exons 2 and 3 cannot be excluded). The typing results will be delivered electronically in accordance with the current HLA nomenclature as G codes, multi-allele codes or (shortened) allele names, depending on the resolution obtained. • Blood Group testing (ABO, Rh) Blood Group testing is done by molecular biological methods only. No serological testings are carried out. Selected exons are sequenced by NGS. Testings achieved with this method have a high rate of concordance with serological testings. In rare cases serological and molecular biological testings differ due to changes outside of the sequenced regions. Submitted testings may only be used for donor pre-selection. The Contractor does not submit cli....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... About 2% of samples are here detected as false negatives. Testing results for CMV from blood can be obtained for approximately 98% of samples. 5.3. HLA Testing qualifies to be a 'service' under GST Law: 5.3.1 The applicant states that outset, he wishes to state that as per the section 2 (52) of the CGST Act, 2017, goods means every kind of movable property other than certain exceptions. As per section 2(102) of the CGST Act, 2017, "services" means anything other than goods, money and securities. It is pertinent to note than HLA testing is a test performed in laboratories on the physical samples of swabs/ Human DNA to maintain a list of potential donors and execute the process of donation in case the samples of donor and done matches. Thus, it is a service performed by laboratories on the samples and hence HLA testing would fall within the definition of "service" as per the CGST Act, 2017. 5.4. HLA Testing -an integral part in the treatment of blood cancer and other blood disorder 5.4.1 Basis the background and above mentioned details, the applicant states that it is absolutely clear that the primary step of the donation process required for tre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ors in the database of donors, the chances of patients finding a suitable match increases to a large extent, thereby, increasing the chances of blood cancer treatment. It is also pertinent to note that the entire and the purpose of the said database is assisting in treatment of patient's blood cancer and other blood disorders. 5.4.7 Further, once the initial testing is done and upon finding a suitable match for the patient, the said step of reconfirming the samples of the identified donor and matching the same with the samples of the patient is also executed by LSL DE, Germany. Therefore, it is evident that the very first step and thereafter the re-confirmatory step, being one of the most important steps in the entire treatment process is being carried out of LSL DE, Germany through testing of the samples sent to DKMS-BMST. 5.4.8 Therefore, the testing of samples provided by DKMS-BMST and creating a database upon classification of the HLA tests conducted is an inevitable step in the entire cycle of treatment of blood cancer / other blood disorders and without the said step, stem cell transplant required for treatment of blood cancer / other blood disorders would n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which, as explained above, is an integral step in the entire process of treatment of an illness, injury, deformity, abnormality i.e. blood cancer and other blood disorders. The said laboratory tests the HLA of the samples provided for various potential donors under the Allopathy system of medicine in India. Given that without this test, the donation and therefore the treatment of illness would not be possible, hence the said HLA typing service providing by LSL DE would be classifiable as health care services. 6.4 Further, as the laboratory in the instant case offers services requiring treatment for an illness, injury, deformity, abnormality under the allopathy system of medicines, recognised system of medicines in India, therefore, the said laboratory would qualify as a clinical establishment as per the definition provided in the GST Law. 6.5 The applicant also contends that the definition of "health care services" has been kept wide and does not specifically restrict any activity apart from certain exclusion, thereby extending the benefit of exemption for overall healthcare activities. 6.6 The applicant contends that since the said service of HLA typing would qualify as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to whether the samples required to be made physically available by DKMS-BMST to LSL DE, Germany eg. Buccal swabs / Human DNA etc. can be considered as 'goods'. A buccal swab, also known as buccal smear, is a way to collect DNA from the cells on the inside of a person's cheek. 7.1.2 The applicant states that the samples required to be made physically available by DKMS form components of Human Blood (?) and the Human Blood and its components are listed as goods in the Notification No.02/2017-Central Tax (Rate) dated 28.06.2017. 8. Regarding the legal provisions not qualifying the said procurement of HLA testing service as a service, the tax on which is liable under reverse charge mechanism, the applicant states as under:- 8.1 As per section 5 of the IGST Act, subject to provisions of sub-section (2), tax shall be levied on interstate supplies of goods or services or both and as per section 5 (3) of the IGST Act, 2017, the Government may exempt any transaction from tax. Section 7 (4) of the IGST Act states that supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce and hence IGST wou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....samples, the testing by LSL DE could not have been possible. 8.5 The applicant states that the facts and situation in the present case clearly attract the provisions of section 13 (3) (a) of the IGST Act and therefore it is inferred that the said services of testing of samples, which are required to be physically made available by the service recipient to the service provider, are provided outside India, i.e. Germany and therefore not liable to tax. Also on the basis of the above, the third condition is not fulfilled and hence the said purchase of HLA testing service is not an import of service under the provisions of GST. The applicant also reiterates that since the service received is not an import of service under GST, the provisions of section 7 and section 5 shall not be applicable and DKMS-BMST shall not be liable to pay taxes under reverse charge mechanism for the purchase of said service. 8.6 Assuming that in case there is a levy of IGST on such services received from outside India, it would result into a break in the value chain. As highlighted earlier, DKMS-BMST is not for profit organisation and hence, for the outward services i.e. Confirmatory typing service, work....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not for profit organisation, a levy of IGST on such procurement of service would result into accumulation of input tax credit and a break in the value chain and therefore, the said services should not be taxable in the hands of DKMS-BMST. PERSONAL HEARING: / PROCEEDINGS HELD ON 09.01.2020 AND 10.03.2020 10. Sri Ravi Banthia, Chartered Accountant and the duly authorised representative of the applicant, appeared for personal hearing proceedings on 09.01.2020 and sought an adjournment to modify the questions as the same were not clear. Later, on 10.03.2020, he appeared and submitted the revised questions before this authority and reiterated the submissions made as narrated earlier. FINDINGS 8s DISCUSSION 11. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by the learned representative at the time of the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 11.1 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame is a testing report in the form of HLA Typing Report and hence LSL DE is providing services to the applicant. 12. Regarding the question, whether this service is a "health care service" or not, the following are noticed : 12.1 "Health Care Services" are defined in paragraph 2 of the Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 and the same is as under: "(zg) "health care services" means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions or body affected due to congenital defects, developmental abnormalities, injury or trauma." The service of HLA typing is to identify the potential donors and is related directly to a transplantation to be done on a future date to a patient requiring such transplant. Analogous to testing of Blood Group, HLA typing identifies the alleles of the donor and these alleles are ....