9911796707
TMI Blog2016 (9) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... rs within the applicant's facilities which are proposed to be in India. Applicant is in the process of negotiating contracts with various customers located outside India. The agreement for the proposed research services and clinical trials to be conducted by the applicant, provides that the following heads of service will be rendered by the applicant to its customers:- i. Clinical Pharmacology: The Service involves Bio-equivalence and Bio-availability clinical studies (studies carried out for generic drugs) which includes fasting and fed conditions, single and multiple dose in healthy subjects, drug-drug interaction, drug-food interaction, special/patient population studies. The study is proposed to be undertaken using formulations in the form of tablets, capsules, gels sprinkles, syrups, sprays, inhalers etc.; ii. Clinical Research: The service involves activities in nature of Project Management, Regulatory Affairs, Project Monitoring, Medical Writing, Bio-Statistics and Programming and Compliance. Each of these are discussed in detail as follows:- a) Project Management- Planning and integration service which includes serving as the primary resources and point of communication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -alia submits that since Rules 5 to 12 are not applicable to the applicant's case, the two rules which are to be considered are Rule 4 and Rule 3; that since the scope of proposed activities to be carried out by the applicant are research based advisory services and are neither related to (a) goods or, (b) requiring physical presence of the customers located outside India and therefore, Rule 4 is not applicable to the activities proposed by the applicant; that the advisory research activities of the applicant are not executionary or performance based service as envisaged in Rule 4 of POP Rules and therefore, the said services are not covered under Rule 4. 5. Revenue submits that in terms of Rule 4(a) of POP Rules, the essential ingredient to levy Service Tax on any service is the location, where the service is provided in respect of goods required to be made physically available by the recipient of service to the provider of service. Further, in terms of Rule 6A (1) (d) of the Service Tax Rules, 1994, any service can be termed as export of service where the place of provision of service is outside India. By synchronous reading of Rule 6A (1) (d) of Service Tax Rule and Rule 4(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lfilled for the place of provision of services is the place where the services are performed, are as under:- i. Where the services are performed with respect to goods, the said goods should be physically made available to the service provider; ii. Where the services are performed in the ordinary course of business, the said service should require physical presence of the service recipient or his representative; that the activities of the applicant are not with respect to any goods and are not provided in presence of the offshore customers and therefore, the activities of the applicant will not be covered under Rule 4. 9. It is observed from the above referred Rule 4(a) ibid with respect to this case that the place of provision shall be the location where services are actually performed, if a) services are provided in respect of goods and b) said goods are required to be made physically available by the recipient of service to the provider of service. 10. It is noticed that applicant's proposed service of Clinical Pharmacology is study carried out for generic drugs. Further, study is proposed to be undertaken using formulations in the form of tablets, capsules, gels sprinkles, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he service e.g. where a consultancy report commissioned by a person is given on a pen drive belonging to the customer. Similarly, provision of a market research service to a manufacturing firm for a consumer product (say, a new detergent) will not fall in this category, even if the market research firm is given say, 1000 nos. of 1 kilogram packets of the product by the manufacturer, to carry for door-to-door surveys. 13. Based on above, applicant submits that Rule 4 only contemplates a situation where the goods are temporarily handed over to service provider for servicing and returned after servicing; that their interpretation is supported by the example of detergent packets distributed and feedback by such prospective customers are not said to be covered by Rule 4. It is to be observed that the Education Guide gives example of some services covered under Rule 4 ibid and technical testing/analysis of goods, which are akin to clinical testing, are also included in the example. This example is similar to the proposed service, as compared to the example of detergent packets. The said paragraph of Education Guide also mentions that "it will not cover services where the supply of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be covered under Rule 4 (a) ibid. Clinical Research carried out in respect of formulations received from the service receiver, that are consumed in the process or clinical testing, which are necessary for carrying-out other processes of Clinical Research, would also be covered under this category, as these services will be provided in respect of formulation. (b) Service relating to Clinical Research provided on stand-alone basis - During personal hearing on 22.07.2016, applicant submitted that services relating to Clinical Pharmacology and Clinical Research would be provided on stand-alone basis and separate invoices would be issued for each service. Applicant submits that the Clinical Research service proposed to be undertaken by the applicant can also not be considered to be service provided in the physical presence of an individual, represented either as the service receiver or a person acting on behalf of the receiver in terms of Rule 4 (b) ibid; that the volunteers which are identified, selected and gathered by the applicant are in India and such volunteers having nothing to do with the Drug Company i.e. the service recipient, and therefore the said volunteers cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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