2020 (4) TMI 871 - AAR - GST

Classification of services - Healthcare Services or not - Human Leukocyte Antigen (TILA) testing services performed by the overseas laboratory outside India on the Human Buccal Swabs sent by DKMS-BMST from India - entry no.74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT - 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 matched with the alleles of the recipient of transplant. The applicant gets the HLA of the potential donors typed and uploaded to the databases for the doctors to identify the potential donors. Hence the service is to received only to shortlist the potential donors and increase chances of getting the perfect donors from a big list of potential donors and going through the entire process of testing ab initio and matching between the patient and the donor individually - Other than for obtaining an organ from a potential donor, this HLA testing is not done for any other purpose in clinical set up and hence this is a for the treatment of an illness, the same is covered under health care services as per the definition given to it. Whether the supplier of services is a clinical establishment, the term clinical establishment is defined in paragraph 2 of Notification No.12 /2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT - It is seen that the HLA testing involves various tests which are for the identification of the alleles of the donor cells and also the suitability of the potential donor for treatment of a patient of illness, i.e. blood cancer and other blood disorders. Hence any institution which does these investigative services would be covered under the definition of clinical establishment as contemplated in the said definition. Hence, the LSL DE is a clinical establishment under the meaning given to it - Hence the services provided by LSL DE to the applicant in the form of HLA Typing would be covered under Health Care Services by a Clinical Establishment and hence is exempt from tax under the IGST Act. Reverse Charge mechanism - HELD THAT - Since the service itself is exempt, the applicant is not liable to pay tax on the services obtained in the form of HLA testing and typing from LSL DE on reverse charge basis. Applicability of tax based on the contention of the applicant that the entire service is provided outside India - HELD THAT - The issue involves the determination of the place of supply which is outside the mandate provided to this Authority and hence no discussion is made on this issue.

Summary

Issues Involved:
1. Whether the HLA Typing Services obtained by the applicant from LSL DE falls under the scope of “health care services by a clinical establishment” and thereby exempt from IGST.
2. Whether the applicant is liable to pay Integrated Goods and Services Tax on the testing services performed by the overseas laboratory outside India on the Human Buccal Swabs sent by DKMS BMST from India.

Issue-Wise Detailed Analysis:

1. Classification of HLA Typing Services as Health Care Services by a Clinical Establishment:

The applicant, a not-for-profit organization, facilitates blood stem cell donations to treat blood cancer and other disorders. They send buccal swabs from potential donors to LSL DE in Germany for HLA Typing, a prerequisite for organ transplantation.

- Health Care Services Definition: As per Notification No. 12/2017-Central Tax (Rate), “health care services” include diagnosis, treatment, or care for illness, injury, deformity, or abnormality in any recognized system of medicine in India.
- Clinical Establishment Definition: The notification defines “clinical establishment” as any institution offering diagnosis or treatment services for illness or abnormalities.

The HLA Typing identifies potential donors for transplantation, akin to blood group testing. It is essential for matching donors with recipients, thus directly related to the treatment of illnesses like blood cancer. The service is provided by LSL DE, which performs diagnostic services, classifying it as a clinical establishment.

Ruling: The services obtained by the applicant from LSL DE in the form of HLA Typing Services are categorized as “health care services provided by a clinical establishment” and are exempt from IGST under Entry No. 77 of Notification No. 09/2017-Integrated Tax (Rate).

2. Tax Liability on Testing Services Performed by Overseas Laboratory:

- Import of Services: Defined under Section 2(11) of the IGST Act, import of services requires the supplier to be outside India, the recipient in India, and the place of supply in India.
- Place of Supply Determination: As per Section 13(3) of the IGST Act, for services requiring physical availability of goods (samples), the place of supply is where the services are performed, i.e., Germany in this case.

The applicant argued that since the testing services are performed outside India and the samples are physically sent to Germany, the place of supply is outside India, and thus, the services are not taxable under GST.

Ruling: The service of HLA Typing received by DKMS BMST Foundation India from the overseas laboratory is exempt from IGST as it falls under “health care services by a clinical establishment.” Consequently, the applicant is not liable to pay IGST on these services under the reverse charge mechanism.

Conclusion: The Authority ruled that the HLA Typing services received from LSL DE are exempt from IGST as they qualify as health care services provided by a clinical establishment. Therefore, DKMS BMST Foundation India is not liable to pay IGST on these services under the reverse charge mechanism.