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TMI Blog2020 (4) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 outside India on the Human Buccal Swabs sent by DKMS BMST from India? 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifelong 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 cancer have been divided into four parts: (i) Stage 1: The blood cancer 1st Stage includes the enlargement of the lym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Only about 30% of the patients in need of a stem cell transplant as life-saving treatment, are able to find a sibling match. The rest 70% depend on finding a matching unrelated donor. Currently, 7 out of 10 blood cancer patie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/ outside India. One such service is the HLA testing service, which is procured by the applicant in India from DKMS Life Science Lab GmbH in Germany (hereinafter referred to as 'LSL DE'). q. HLA testing, also known as HLA typing or tissue typing service, is a DNA test that id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Confirmatory Typing Services as well. Given that DKMS-BMST is a not for profit organisation, it recovers negligible amount towards such HLA typing services received from its overseas laboratory. Work-Up Service: Additionally, to rule out any infectious diseases, which could potentially put the patient's health at risk, the donor's blood is tested for any infectious d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 clinically applicable blood group testings. Testing results for blood groups can be obtained for approximately 90% samples. * CCR5 testing CCR5 is a cell surface chemokine receptor of leukocytes, eg. T-cells or macrophages. A 32 by deletion in the corresponding gene leads to a truncated non-functional protein. To detect this 32 by deletion, a 453 by amplicon is generated and subsequently sequenced. Testings are reported as either WT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 treatment of blood cancer and other blood disorders is identifying a donor. Now, to identify a donor, samples of potential donors would be required to be tested to classify those into specific categories as prescribed in medical terminology. 5.4.2 In the current scenario, the procedure of testing the samples of potential donors for further classification is entirely executed by LSL DE, Germany. The applicant states that it is pertinent to note that basis of such classification of HLA of potential donors into categories, the doctors, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E, 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 not have been possible. 6. For the first question, regarding the legal provisions classifying the said HLA testing service under the definition of Health Care Services provided by Clinical Establishment and therefore exempt from the levy of tax, the applicant states as under: 6.1 The section 2(47) of the CGST Act, 2017, 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. As per entry no.74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and as amended from time to time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lness, 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 health care services provided by clinical establishment and hence exempted from taxes leviable thereon, the applicant shall not be required to pay taxes under reverse charge mechanism for services provided by overseas laboratory. 6.7 The applicant draws the attention to the ruling of this authority in the case of Sayre Therapeutics Private Limited and Matrix Imaging Solutions India Private Limited in support of his claim. He also draws reference to the following cases related to Service Tax era in support of his claim: a. Aditya Surgical Co. vs. State of Karnataka [2018 (10) GSTL 284 (Kar)] = 2017 (9) TMI 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 would be levied on the said supply. 8.2 Import of services have been defined in section 2(11) of the IGST Act as under: 'import of services means the supply of any service, where - (i) the supplier of service is located outside India; (ii) the recipient of service is located in India; and (iii) the place of supply of service is in India;' The term India has been defined in section 2(56) of the CGST Act, 2017. In the instant case, the supplier of services i.e. LSL DE is located in Germany and hence the first condition is satisfied. Further, the recipient of services i.e. DKMS-BMST is located in India and hence the second condition is also satisfied. 8.3 Regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice 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-up services etc. it recovers negligible amount from the patients. Additionally, the applicant also highlights that he does not charge any consideration for a lot of services provided by it in case the donation is not successful. It also does not recover any amount for the HLA Testing services performed for all potential donors. Its major source of funding is monetary donations received from entities in India and outside India. Given the same, the applicant does not have a substantial amount of taxes on its outward supply. Hence, in case IGST is leviable on such procurement of services, there would exist a huge blockage of Input Tax Credit which DKMS-BMST will not be able to utilise. 8.7 The applicant has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 11.2 The issues involved in the above case are whether the HLA Typing Services obtained by the applicant from LSL DE falls under the scope of "health care services by a clinical establishment"? 11.3 The applicant collects the buccal swabs and samples from the potential donors of blood stem cells and sends the same to the foreign entity. i.e. LSL DE for HLA Typing which is required to be done as a prerequisite for any organ transplantation. It is similar to doing a blood group testing before collection of blood from any blood donor. The samples of the potential donors would be tested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... store 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 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. This testing is sine qua non for any transplantation of an organ not restricted to blood stem cell transplantation and it is only a preponement of such testing or diagnosis of the potential donor to obtain the blood stem cells which is for the treatment. Other than for obtaining an organ from a potential don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-taxable online recipient, the whole of integrated tax leviable under section 5 of the said Integrated Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services. In this case, the tax liability, if any, would have to be paid by the recipient of service, i.e. the applicant. 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. 16. Regarding the applicability of tax based on the contention of the applicant that the entire service is provided outside India, the same is verified. 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. 17. In view of the foregoing, we rule as follows RULING 1. The services of HLA Typing received by DKMS BMST Foundation India from the overseas laboratory is covered under the definition of "health care services by a clinical establishment" and thereby is exempted from IGST leviable thereon and accordingly not taxable in the hands of the applicant under reverse charge mechanism. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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