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2021 (2) TMI 195 - AAR - GSTClassification of services - HSN Code - Healthcare services or not - clinical research activities carried out in India to determine the safety and effectiveness (efficacy) of medications, devices, diagnostic products and treatment regimens intended for human use - applicability of exemption given under Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017 - input tax credit of tax paid or deemed to have been paid - tax on outward services - requirement of registration - HELD THAT - The study undertaken by the applicant is being conducted in three Government Medical Colleges in Calicut, Bengaluru and Hubballi and is in partnership with the National Health Mission of the Government of India. It has been approved by all relevant ethics committees and the Indian Council of Medical Research. The Study is funded by the UK Government (National Institute for Health Research) at the request of WHO, for reducing epilepsy in India. It is sponsored by Imperial College, London and is entirely for non-profit and for the benefit of the poor people in India. If the study shows the care bundle intervention is effective, then it would form the basis for Health Policy in India. Compensation, invoicing and payment - HELD THAT - It is seen in the agreement that the sponsor shall compensate only for the completed patient visits, laboratory and other investigations, pharmacy costs and other comparable costs as defined by the protocol and approved by the sponsor. Any other expenses shall not be compensated for without a separate written agreement concluded with the sponsor thereof. The sponsor shall compensate for any extra travelling costs attributable to the trial subject using public transportation and caused by his/her participation in the trial. In order to ensure the privacy of the subjects, the institution (i.e. applicant) takes care of the payments of compensations to the subjects and charges the sponsor these costs. The sponsor shall bear the costs of all necessary training, meetings, other travelling and events related to the trial - All payments relating to the trial, including compensation paid to the investigators and other research personnel shall be directed to the account indicated in the invoice of the institution. Relationship between the parties - HELD THAT - The agreement states that each party at all times are to be considered as independent contractor and transacting on principal to principal basis and shall have no authority to assume or create any obligation whatsoever express or implied, in the name of the other Party or to bind the other Party in any way or manner. Nothing in the agreement shall be deemed to constitute either party a partner, agent, joint venture or legal representative of the other party, or to create any fiduciary relationship between the parties - It is clear from the tripartite agreement, that the applicant is entering into contractors or agreements with the trial sits, provide equipments to enable the conduct of research, engage research staff, manage the safe conduct of research and liaise with the investigators. This clearly states that the applicant is managing the research in India and in not per-se involved in the research. It is a support activity and the principal investigators conducting the research are the actual persons doing research and providing the data to the sponsor. Research activities - HELD THAT - The sample consultant agreement submitted by the applicant is examined and found that the consultant hired are rendering services to the applicant and the manner in which the consultant chooses to complete the services is in the sole discretion and control of the consultant. The consultant's obligations shall be conditioned upon receiving such information and co-operation from the applicant as may be reasonably necessary to perform the services. It is also made clear that the agreement would not constitute an employer-employee relationship and it would be the intent of the applicant and the consultant that the consultant at all times be an independent contractor. It is also made clear that the applicant would be liable to pay the consideration of the contract - it is seen that the outsourced consultants by the applicant are also engaged in providing support services and not actual research activities. The opinion of the applicant that their activity would be covered under health care services is examined and found that the term health care services is defined in Notification No.09/2017 - Integrated Tax (Rate) dated 28.06.2017 - The services provided by the applicant, as explained earlier is not in connection with the diagnosis or treatment or care for illness and is related to support services for research and is covered under SAC 998599 and hence is not covered under healthcare services and thereby not covered under entry no. 74 of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017. Whether the transaction is an export of service? - HELD THAT - In the present case, the applicant is the supplier of service 86 is located in India and the recipient of service, i.e. the Imperial College of London, is located outside India. The payment for such service is received in convertible foreign currency and the supplier and recipient are not related persons. Hence the determination of whether the service provided by the applicant to the Imperial College London is an export of service or not is wholly dependent on the place of supply. Whether the applicant is an intermediary or not? - HELD THAT - The applicant is involved in the arranging and facilitation of the supply of research services by the principal investigator to the Imperial College London and he is not covered under the exclusion clause as he is not supplying such research services on his own account, therefore the applicant is covered under the definition of an intermediary under section 2(13) of the IGST Act, 2017. The activity of the applicant is squarely covered under the entry no.23(ii) of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and is liable to tax at 9% CGST and similarly liable to tax at 9% KGST, in case the transaction is a intra-State supply - Since the services provided by the applicant is not exempt, the applicant is eligible to claim and avail input tax credit in terms of section 16 of the CGST Act, 2017 and section 16 of the KGST Act, 2017 - Since the applicant is involved in intra-State supply of services, as the location of the supplier and the place of supply is the same state, the applicant is liable to register as per the terms of section 22 of the CGST Act, 2017.
Issues Involved:
1. Applicable SAC for the activities. 2. Applicability of exemption under Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017. 3. Eligibility to avail input tax credit. 4. Tax liability on outward services and applicable rate. 5. Requirement for registration under the GST Act. Issue-wise Detailed Analysis: 1. Applicable SAC for the Activities: The activities undertaken by the applicant, M/s Vevaan Ventures, are classified under SAC 998599. This classification covers support services for research, which includes activities such as identifying research sites, onboarding research staff, purchasing necessary medical equipment, and managing the research process in India. 2. Applicability of Exemption under Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017: The applicant argued that their services qualify as "Healthcare Services" provided by a "Clinical Establishment" and should be exempt under Notification No. 9/2017-Integrated Tax (Rate). However, the authority concluded that the services provided by the applicant are not in connection with diagnosis, treatment, or care for illness but are support services for research. Therefore, these services do not qualify as "Healthcare Services" and are not exempt under the said notification. 3. Eligibility to Avail Input Tax Credit: Since the services provided by the applicant are not exempt, the applicant is eligible to claim and avail input tax credit for the tax paid on inward supplies, subject to the provisions of section 16 of the CGST Act, 2017 and KGST Act, 2017. 4. Tax Liability on Outward Services and Applicable Rate: The applicant's activities are covered under entry no. 23(ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The services are liable to tax at the rate of 9% CGST and 9% KGST. 5. Requirement for Registration under the GST Act: The applicant is involved in intra-State supply of services, as the location of the supplier and the place of supply is the same state. Therefore, the applicant is liable to register under section 22 of the CGST Act, 2017. Ruling: 1. The activities undertaken by the applicant are covered under SAC 998599. 2. The exemption under Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 is not applicable to the applicant's transactions. 3. The applicant can avail input tax credit of tax paid on inward supplies, subject to section 16 of the CGST Act, 2017. 4. The applicant is liable to tax on outward supplies at the rate of 9% CGST and 9% KGST. 5. The applicant is required to register under section 22 of the CGST Act, 2017.
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