TaxTMI 
TaxTMI 
2025 (4) TMI 1002
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....ode 9981 would become relevant in case where the proposed services would not qualify for exemption under entry No. 74 of the Notification No. 12/2017-CT(R) dated 28th June 2017 in absence of exemption for specified service accounting code. 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. 01. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: 1.1 Epigeneres Biotech Private Limited ('EBPL' or 'Epigeneres' or 'the Company' or 'the Applicant') is an entity incorporated in India having its place of business at B Block, Ikon House, Sun Mill Compound, Senapati Bapat Marg, Lower Parel, Mumbai, Mumbai City, Maharashtra, 400013, India. The Company is registered under GST in the state of Maharashtra vide GSTIN -27AABCU4383J1Z0 and other Indian tax laws (as applicable in India). ....
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.... people worldwide will have their genome sequenced by 2025. However, there has not been an assessment of global NGS implementation. • The technology to be used by the applicant is a type of DNA/RNA sequencing/amplification, gene expression profiling testing. By using the specified technology, the result on HrC scale marker would be provided by the applicant which could be used as the base for further treatment of the disease. The testing would involve human intervention to read the HrC scale and identification of disease. • The report generated would highlight the chances/ possibilities of cancer in human body for next one-year basis the DNA/ RNA genes in the human body. • The said test will help in detecting if cancer is absent, imminent, or present. 1.6 The lab which is to be set up by the applicant would be at Ikon House, B-Block, Sun Mill Compound, Senapati Bapat Marg, Lower Parel, Mumbai, Pin-400013, Maharashtra, India. 1.7 The brief of technical process from extraction of blood to generation of report is as under: • Blood samples are subjected to RNA extraction using standard protocols. • This RNA is quant....
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....26 Vortex Mixer Tarson 27 Rotospin Tarson 28 Hot waterbath Labman 02. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW: 2.1 At the outset, the applicant would like to draw your attention to Section 2 (47) of the CGST Act, 2017 which defines "exempt supply" and as per section 11 (1) of the CGST Act, 2017, the Government may issue notification exempting a goods or service from tax. 2.2. It may be noted that healthcare services provided by clinical establishment has been exempted under the Notification no. 12/2017-CT(R) dated 28th June 2017 (herein after referred to as 'Exemption Notification'). 2.3. The relevant extract of entry which provides exemption to health care services under the Exemption Notification is as follows: SI.No. Chapter, Section Heading, Group or Service Code (Tariff), Description of Services Rate (%) Condition 74 Heading 9993 Services by way of- (a) health care services by a clinical establishment, an authorised medical practitioner or para medics, NIL NIL 2.4. The term "Health care services" is defined in the said notification vide clause (zg), which is also reproduced hereunder: ....
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.... services provided by way of diagnosis or treatment or care for illness, injury, deformity, abnormality, or pregnancy. Further, the said services should be provided in any recognised system of medicines in India. ('Means' part of the definition) ii. It includes services by way of transportation of the patient to and from a clinical establishment. ('Inclusionary' part of the definition) iii. It does not include services of hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury, or trauma. ('Exclusion' to the definition) 2.10. Out of above three limbs, the first limb of the definition is read as "services provided by way of diagnosis or treatment or care for illness ... " seems more relevant to the activities to be performed by the company. With the backdrop of the proposed business of the company, the company humbly makes below submission: a) It may be noted that the word 'by way of diagnosis' as used in the above-mentioned definition has not been defined in GST law. The general inte....
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....her, it is submitted that the definition of clinical establishment (as provided above) can be divided in following two limbs / categories: I. It means a hospital, nursing home, clinic, sanatorium, or any other institution that offers services or facilities of diagnosis or treatment or care for illness, injury, deformity, abnormality, or pregnancy in any recognised system of medicines in India, OR II. It means a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. a) In the above backdrop, the applicant may not fall under the first category since the applicant is not a hospital, nursing home etc. However, the set up under which the applicant would perform diagnostic services may get qualify under second category since the applicant is working as an independent entity at its premises from where the testing/ laboratory services are undertaken. b) The applicant also bring notice to your good self that they have applied for a licence from National Accreditation Board for Testing and Calibration Laboratories) which is an autonomous body under the aegis of Department of S....
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.... clinical establishment, the applicant believes that it is a clinical establishment as required by the referred entry. i) Thus, the applicant requests your good self to validate and confirm this understanding. 2.13. We hereby also attached various news article which were published for the research undertaken by the applicant. 2.14. In view of the above, we would like to draw reference to various rulings: i. We would like to draw reference to Kerala Advance ruling in case of M/s Medivision Scan and Diagnostic Research Centre (P) Ltd [KER/41/2019 dated: 12.04.2019] wherein it has been held that services provided in diagnostic sentinels such as clinical biochemistry, micro biology, chemotology, clinical pathology, radiology, ECG, radiometry, pulmonary function test qualify as health care services and a diagnostic centre are clinic establishment. The relevant para of the judgement is reproduced as under: Quote: The diagnostic centres are organized facilities to provide diagnostic procedures such as radiological investigation supervised by a radiologist and clinical laboratory services by laboratory specialists usually performed through referral....
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.... advice doctors for line of treatment to the establishment. They provide the said services in "Allopathy" system of medicines, recognised in India. Therefore, they qualify to be a clinical establishment Unquote: In the given case, the medical team of the applicant is involved in complete cycle of testing process, similar corollary can be drawn in the given case if EBPL would undertake end to end activity till the time reports are being submitted. However, as per as-is business plan, the outcome of tests undertaken by EBPL would be a first step which may require further assessments to support the outcome of the presence and stage of cancer. iii. The reference is being drawn to ruling in case of M/s DKMS BMST Foundation India [KAR ADRG 24/2020 dated: 23.04.2020], wherein it has held that Human Leukocyte Antigen (HLA) testing services performed by an overseas laboratory outside India on Human Buccal Swabs sent by a nonprofit organisation in India would be exempted from GST as it would be covered under healthcare services by a clinical establishment. The brief summary of the case is provided as below: Quote: The service of HLA typing is to i....
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....and thereby is exempted from IGST leviable thereon and accordingly not taxable in the hands of the applicant under reverse charge mechanism. iv. In case of M/s J C GENETIC INDIA PRIVATE LIMITED [23/2018 dated 21-01-19], it has been held that the services such as activities in the diagnosis pre-and post-counselling therapy and prevention of diseases by providing necessary sophisticated tests are health care services however, the Applicant has failed to prove their legal status as Clinical Establishment and they are merely working as ancillary or sub-contractors to other accredited companies. The relevant para is quoted below: Quote: The applicant also provides required treatment by Physician for oncology, Cardiology, Nephrology, Dermatology, Neurology, Haematology, Rheumatology, Gastroenterology, Immunology, Retinopathy, etc. They also provide sophisticated and relevant tests by sequencing BRCA 1 & BRCA 2 gene mutation tests and also predict patient risk for ovarian cance. It is pertinent to mention here that the exemption for which the instant application has been filed is Service Specific as well as Service Provider Specific. Thus, to qualify fo....
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....irmation on this understanding, the applicant has opted for advance ruling. 2.16. Given the above in-depth discussion and our understanding with respect to qualification for exemption, we hereby kindly draw your attention to the classification of services. It is to be noted that the description of services as provided in the above entry covers service accounting code ('SAC') 9993 within its purview. SAC 999316 i.e. Medical Laboratory and Diagnostic-imaging services is a part of Group 99931 human Health Services which is under Heading 9993 Human Health and Social Care Services. Service Accounting Code (SAC) Particulars/ Description 999316 Medical laboratory and diagnostic-imaging services 2.17. The interpretation/ reference is drawn to the "Explanatory Notes to the Scheme of Classification of Services" as issued by the CBIC on their website to further analyze SAC 999316. Service Accounting Code 999316 - Medical laboratory and diagnostic-imaging services - • Service Accounting Group Heading "9993" covers all types of 'Human health & social care Services. • Service Accounting Code "999316", which falls within Group Heading "9993", specifi....
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.... website. Service Accounting Code 998113 - Research and experimental development services in medical sciences and pharmacy - Service accounting code "998113" which fall within group "9981" i.e., Research and development services, specifically covers 'Research and experimental development services in medical sciences and pharmacy' - "Research and experimental development services in medical sciences and pharmacy have been explained to specifically include basic and applied research services and experimental development services related to treatment of diseases, preventive hygiene, pharmacy, etc." - Service accounting code "998111" which fall within group "9981" i.e., Research and development services, specifically covers 'Research and experimental development services in natural sciences' - We hereby borrow the explanation provided for service accounting code "998111" for "Research and experimental development services in natural sciences", it covers basic and applied research services in natural sciences, experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observab....
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....sting and validation of new or improved products, processes, or services in environments representative of real-life operating conditions. e. In given case where the testing to be undertaken by EBPL would be newly launched method which would aim at new findings which may be uncertain for each human-being and can be construed to assist in gaining knowledge regarding presence of cancer. 2.20. It is pertinent to note that amongst two Heading 9993 and 9981, the exemption under GST is available only for heading 9993. Hence, it becomes imperative to correlate classification with the exemption. 2.21. Having stated above, Notification No. 12/2017-Central tax (rate) provide an explanation in Note 3: the relevant extract of which is as under: 3. Explanation .- For the purposes of this notification,- (i) Reference to "Chapter", "Section" or "Heading", wherever they occur, unless the context otherwise requires, shall mean respectively as "Chapter, "Section" and "Heading" in the scheme of classification of services. (ii) Chapter, Section, Heading, Group, or Service Code mentioned in Column (2) of the Table are only indicative. 2.22. With the above de....
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....ear basis the DNA/ RNA genes in the human body. The said test will help in detecting if cancer is absent, imminent, or present. (ii) The applicant has applied for below specified licenses to undertake said tests: • NABL: National Accreditation Board for Testing and Calibration Laboratories. • GLP: The Principles of Good Laboratory Practice • DSIR: Department of Scientific and Industrial Research. Comments on the application and proposed relief sought by the party are submitted as under: 3.3 (a) It prima-facie appears from the submissions made by the party that they would be carrying out blood-based tests and the outcome of such blood tests would assist in prognosis of cancer. The applicant have sought benefit of exemption under Notification No. 12/2017-Central Tax dated 28.06.2017. (b) In this regard entry 74 (a) of the said notification 12/2017 ibid extends exemption to services falling under Chapter heading 9993 provided by way of - Health care services by a clinical establishment, an authorized medical practitioner or para-medics'. Thus to be eligible to avail exemption under the said notification primary conditions viz. Classif....
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....herein. (vi) Also, under Chapter VII Clinical Investigation of Medical Device And Clinical Performance Evaluation of New In Vitro Diagnostic Medical Device Rule 49. Conduct of clinical investigation, it is forthcoming that; 'No person or sponsor shall conduct any clinical investigation in respect of investigational medical device in human participants except in accordance with these rules and in accordance with the permission granted by the Central Licensing Authority." (vii) In this case, no license under the Drugs & Cosmetics Act ibid has been obtained so far, as forthcoming from the documents under submission. Also, it's apparent that permission from the given Central/State Licensing Authority as per Medical Device Rules, 2017 ibid is needed in their case, for it to qualify as diagnostic services by a clinical establishment, which does not seem to have been complied with by the applicant. (viii) In absence of such permission/license/certificate, the tests proposed to be conducted by the applicant could not be regarded as approved 'diagnostic tests' and hence such tests get more akin to clinical trials for 'Research & Development experiment' purpose rat....
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....al engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation process biotechnology techniques like bioreactor fermentation, bioprocessing, bioleaching, biopulping, biosulphurization, bioremediation, biofiltration, and phytoremediation; 6. gene and RNA vectors likegene therapy, viral vectors; 7. bioinformatics; nanobiotechnology Since the primary activity here is development of Cancer Prognostic and Diagnostic Technologies, it seems to be aptly covered under the SAC 998111/998113 and therefore ineligible for the benefit of exemption under notification 12/2017 ibid and consequently chargeable to GST at the appropriate rate. 3.6 In view of the foregoing, it is concluded that; (i) the applicant is not qualifying for exemption from GST under Notification No. 12/2017-CT dated 28.06.2017 ibid as claimed and is therefore required to discharge GST at appropriate rate. (ii) the proposed activity is appropriately classifiable under SAC 9981 for which no exemption is allowed. 04. HEARING Preliminary e-hearing in the matter held on 05.04.2022. Smt. Sakshi Hasija, Learned GST Consultant & Mr. Jigar Doshi, Learned GST Consu....
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..../possibilities of cancer in human body in next one-year basis the DNA/RNA genes in the human body. They claim that the said test will help in detecting if cancer is absent, imminent or present. 5.3. The process of diagnosis has been mentioned as extraction of blood samples which are then subjected to RNA extraction using standard protocols. The RNA is quantitated and then a fixed amount is subjected to qRT-PCR for specific markers. The results are compared between control and cancer patient. Fold change is suggestive of presence of cancer. They have submitted that they have the following licences :- i) Certificate of Registration of ethiopacific certification and Inspection ISO 17025:2017 Testing and Calibration laboratories for Development of cancer prognostic diagnostic technologies, building and commercializing innovative test. ii) Good Laboratory Pactice certificate from Ethiopacific Certification and Inspection, for development of cancer prognostic, diagnostic technologies, building and commercializing innovative test. They also claim to have applied for a licence from National Accreditation Board for Testing and Calibration Laboratories under the categ....
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....rectly related to the issue in hand i.e. HrC test co-developed by the applicant with Singapore based Tzar Labs Pte. Ltd. It is observed that said the test claimed to be a diagnostic test by the applicant is still in its developmental stage and is not yet validated by the medical regulatory bodies. Diagnosis has been described as "pre-existing set of categories agreed upon by the medical profession to designate a specific concern." Any inconclusive research, not agreed to by the medical fraternity nor approved by the regulatory authorities in India such as the DCGI through CDSCO, the ICMR or any other regulatory body under the Drugs & Cosmetics Act, would not qualify as a Health Care Service as envisaged under the Notification No. 12/2017. In order to qualify as Health Care Service, the diagnosis should be recognized and validated by the medical fraternity and the Indian regulatory authorities. It is only then that the tests carried out by the applicant would qualify as a health care service. Till that time, it remains under the realm of research and development of new technology in the field of bio technology and medicine. 5.5. We find that the applicant has not produced a....
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....Explanation of SAC Code 998111 reads as under: - This service code includes basic and applied research services in natural sciences, experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application of use in view and experimental development services involving systematic work, drawing on knowledge gained from research and practical experience, that is directed i. to producing new materials, products, and devices; to installing new processes, systems and services; or ii. to improving substantially those already produced or installed in physical sciences related to heat, light, electromagnetism, astronomy, etc; iii. in chemistry and biology related to catalyses, fermentation, physiology and biology of animals and plants, micro-organisms, etc; iv. in biotechnology related to knowledge requiring one or more of the techniques: DNA/RNA like genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and the use of antisense technology; proteins and other molecules l....