TMI Blog2020 (4) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividually - 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 Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding 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. The applicant furnishes some facts relevant to the stated activity. a. The applicant states that they are a joint venture of two reputed non profit organisations, BMST (Bangalore Medical Services Trust) and DKMS, one of the largest international, not for profit blood stem cell donor centres in the world. DKMS-BMST is a company incorporated under section 8 of the Companies Act, 2013, and has obtained certificate of incorporation ( COI ) bearing certificate no. U74900KA2015NPL082065 dated 6th of August, 2015. b. DKMS-BMST is a charitable organisation and has obtained certificate w.r.t. section 12-AA(1)(b) of the Income Tax Act, 1961 and an approval under section 80G(5)(vi) of the Income Tax Act, 1961. c. A prior permission under Foreign Contribution Regulation Act ( FCRA ), 2010 to receive foreign contribution is provided to a not for profit organisation. DK ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced. 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 lymph nodes. This happens because of the sudden increase of the number of the lymphocytes. The risk at this stage is very low as the cancer is not yet spread or affected any other physical organ. (ii) Stage 2: In the blood cancer 2nd Stage, spleen, liver and lymph nodes get enlarged. It is not necessary that all these organs get affected at the same time; however, this stage includes one of these organs for sure. The growth of the lymphocytes is very high in this stage. (iii) Stage 3: In the blood cancer 3rd Stage, anemia develops in the third stage and above-mentioned organs are still found enlarged. It is sure that more than two organs get affected in this stage. (iv) Stage 4: The blood cancer 4th Stage is the last stage with the highest risk ratio. The rate of blood platelets starts falling rapidly. The cancerous cells start affecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 patients in India are unable to find a compatible donor within the family and are likely to find an unrelated matching blood stem cell donor. The odds are even lower for those with diverse ancestry. This can change by registering more potential blood stem cell donor. j. In some cancers, such as certain leukemias, multiple myeloma, and some lymphomas, a stem cell transplant can be an important part of treatment and often their only chance of survival. A high dose of chemo works better than standard dose to kill cancer cells but high doses can also kill all the stem cells and cause bone marrow to completely stop making blood cells, which are required to be alive. Given the same, a stem cell transplant is a better way in many cases as the transplanted stem cells replace the body s stem cells after the bone marro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 identifies transcriptions of antigens on the surface of cells and tissues. It is used to match a transplant recipient with a compatible donor. HLA testing Services involve currently the following kinds of testing: a. General Testing of HLA-A, -B, -C, -DRB, -DOB, -DPB b. Blood Group Testing c. CCR5 Testing d. KIR Testing e. CMV IgG Antibody Testing. The applicant has entered into an agreement with LSL DE to provide the said laboratory testing services to the applicant. 5. Regarding the question for the advance ruling, the applicant states as under: 5.1 On the background of the activities carried out by the applicant (a) The first and integral step of identifying the HLAs of potential donors by creating a registry/ database of potential do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 diseases such as hepatitis etc. After that, once the patient s treating doctor selects the potential donor, the donor finally decides whether he / she would like to proceed with the blood stem cell donation. This is where the work-up process begins. DKMS-BMST provides work-up services to transplant centres in India and outside. This includes the co-ordination between blood stem cell donor, the collection centre (medical facility where the blood stem cell collection takes place) and the transplant centre (medical facility where a patient receives a transplant from an unrelated donor). A medical assessment of the donor follows to ensure that there are no risks to the donor or to the patient. If there are no risks then the donor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Wildtype) or De132 for each copy designating a copy without or with deletion, respectively. Typing results for CCR5 can be obtained for approximately 96% of samples. KIR (Killer cell Immunoglobulin like Receptor) testing We sequence exons 3, 4, 5, 7, 8 and 9 of the KIR genes to enable genotyping of the KIR genes at allelic resolution. Alleles differentiated only by sequence variation outside the sequenced exons cannot be distinguished. In addition some ambiguities arise due to the lack of phasing information between exons. Those remaining ambiguities will be reported as GL strings. In a small fraction of the genotyped KIR genes, the data quality is insuffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired 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, hospitals, transplant centres including the patients are able to conduct a search and find a suitable match. In case the said classification would not have been done, the patient would not have been able to find a suitable match in the limited life time available to them. 5.4.3 Further, the applicant reiterates that many patients suffering from blood cancer and other blood disorders need a blood stem cell transplant to survive. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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, the services by way of health care services by clinical establishment, an authorised medical practitioner or para-medics have been granted absolute exemption from the whole of taxes leviable thereon. 6.2 Paragraph 2 of the aforementioned notification also defines health care and clinical establishment as follows: (zg) health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal 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 1536 - KARNATAKA HIGH COURT b. Dr.Reddy s Laboratories Ltd. vs CCE 86 C [2008 (232) ELT 819 (Tri-Bang) = 2007 (11) TMI 520 - CESTAT, BANGALORE c. Flex Engineering Ltd. vs. Commissioner of Central Excise, U.P. [2012 (278) ELT 153 (SC)] = 2012 (1) TMI 17 - SUPREME COURT d. Sudarshan Chemicals Industries vs. Commissioner of Central Excise, Pune [2010 (262) ELT 974 (Tri- Mumbai)] = 2010 (5) TMI 746 - CESTAT MUMBAI e. Aztecsoft Ltd. vs Commissioner of Central Excise, Bangalore [2012 (26) STR 552 (Tri-Bang)] = 2012 (11) TMI 642 - CESTAT, BANGALORE f. Micro Software Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the third condition, the provisions of section 13 of the IGST Act shall apply to determine the place of supply of services where the location of the recipient of service or supplier of service is outside India. The applicant submits that the goods are required to made physically available by the recipient of service to the supplier of service. As per section 13 (3) of the IGST Act, the place of supply of services shall be the location where the services are actually performed in case of services supplied in respect of goods which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the support of the following judgements and rulings in support of his claims: a. Order of the Advance Ruling Authority of Maharashtra in the case of Behr-Hella Thermocontrol India Pvt. Ltd. = 2018 (11) TMI 887 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA b. Crompton Greaves Ltd vs CESTAT, Aurangabad [2016 (42) STR 306 (Tri-Mumbai)] = 2015 (12) TMI 1167 - CESTAT MUMBAI -wherein it is held that the performance of testing services provided by the foreign based entity where the testing is conducted in the foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the LSL DE at their laboratory in Germany and the results are posted onto a database with clear classification based on the alleles and the location of the donors. For this a consideration is charged to the applicant. 11.4 It is no doubt that LSL DE is providing a service to the applicant as the applicant is liable to pay the consideration for the services provided. The contract agreement for the Laboratory Services entered between the applicant and the DKMS Life Science ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... splant. 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 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. 13. Regarding the issue 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 as under: (s) clinical establishment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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