Place of supply in case of Certain Notified Services (Where either the supplier or the recipient is located outside India) [ Section 13(13) of IGST Act ] - GST Ready Reckoner - GST

Residual powers of the Central Government Residual powers of the Central Government [ Section 13(13) of IGST Act 2017 ] S.No. Nature of Supply of services Place of Supply 1 In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances The place of effective use and enjoyment of a service. Important Notification In exercise of these power, the government has issued Notification No. 04/2019- Integrated Tax dated. 30.09.2019 as amended time to time. Table A Sl. No. Description of services or circumstances Place of Supply (1) (2) (3) 1. Supply of research and development services related to pharmaceutical sector as specified in Column (2) and (3) from Sl. No. 1 to 10 in the Table B by a person located in taxable territory to a person located in the non-taxable territory. The place of supply of services shall be the location of the recipient of services subject to fulfillment of the following conditions:- (i) Supply of services from the taxable territory are provided as per a contract between the service provider located in taxable territory and service recipient located in non-taxable territory. (ii) Such supply of services fulfills all other conditions in the definition of export of services, except sub- clause (iii) provided at section 2(6) of IGST Act, 2017 . 2. Supply of maintenance, repair or overhaul service in respect of aircrafts, aircraft engines and other aircraft components or parts supplied to a person for use in the course or furtherance of business. The place of supply of services shall be the location of the recipient of service. 3. Supply of maintenance, repair or overhaul service in respect of ships and other vessels, their engines and other components or parts supplied to a person for use in the course or furtherance of business The place of supply of services shall be the location of the recipient of service. Table B Sl. No. Nature of Supply General Description of Supply (1) (2) (3) 1. Integrated discovery and development This process involves discovery and development of molecules by pharmaceutical sector for medicinal use. The steps include designing of compound, evaluation of the drug metabolism, biological activity, manufacture of target compounds, stability study and long-term toxicology impact. 2. Integrated development 3. Evaluation of the efficacy of new chemical/ biological entities in animal models of disease This is in vivo research (i.e. within the animal) and involves development of customized animal model diseases and administration of novel chemical in doses to animals to evaluate the gene and protein expression in response to disease. In nutshell, this process tries to discover if a novel chemical entity that can reduce or modify the severity of diseases. The novel chemical is supplied by the service recipient located in non-taxable territory. 4. Evaluation of biological activity of novel chemical/ biological entities in in-vitro assays This is in vitro research (i.e. outside the animal). An assay is first developed and then the novel chemical is supplied by the service recipient located in non-taxable territory and is evaluated in the assay under optimized conditions. 5. Drug metabolism and pharma-cokinetics of new chemical entities This process involves investigation whether a new compound synthesized by supplier can be developed as new drug to treat human diseases in respect of solubility, stability in body fluids, stability in liver tissue and its toxic effect on body tissues. Promising compounds are further evaluated in animal experiments using rat and mice. 6. Safety Assessment/ Toxicology Safety assessment involves evaluation of new chemical entities in laboratory research animal models to support filing of investigational new drug and new drug application. Toxicology team analyses the potential toxicity of a drug to enable fast and effective drug development. 7. Stability Studies Stability studies are conducted to support formulation, development, safety and efficacy of a new drug. It is also done to ascertain the quality and shelf life of the drug in their intended packaging configuration. 8. Bio-equivalence and Bio-availability Studies Bio-equivalence is a term in pharma-cokinetics used to assess the expected in vivo biological equivalence of two proprietary preparations of a drug. If two products are said to be bio-equivalent it means that they would be expected to be, for all intents and purposes, the same. Bio-availability is a measurement of the rate and extent to which a therapeutically active chemical is absorbed from a drug product into the systemic circulation and becomes available at the site of action. 9. Clinical trials The drugs that are developed for human consumption would undergo human testing to confirm its utility and safety before being registered for marketing. The clinical trials help in collection of information related to drugs profile in human body such as absorption, distribution, metabolism, excretion and interaction. It allows choice of safe dosage. 10. Bio analytical studies Bio analysis is a sub-discipline of analytical chemistry covering the quantitative measurement of drugs and their metabolites, and biological molecules in unnatural locations or concentrations and macromolecules, proteins, DNA, large molecule drugs and metabolites in biological systems.