The Commissioner of CGST (Appeals), Nodia has held that no GST is payable as research conducted in India but service recipient is based in Germany.
The commissioner noted that the appellant has entered into a Licence and Collaboration
Agreement with Bayer AG, Germany for the identification and discovery of STING antagonists for the treatment of the autoimmune disease, suitable for clinical development through the performance of research programmes.
As per the terms of the Agreement, Bayer AG would reimburse the respondent for performing its part of the research activities i.e. synthesis and testing of compounds. All the research activities are carried out by the respondent at its principal place of business situated at Noida, U.P., India which is recognised as the inhouse R & D unit by the Ministry of Science and Technology, Department of Scientific and Industrial Research. As such, in the nutshell it can be summarised that the appellant was doing scientific research and analysis on behalf of the service recipient and was submitting their findings to them. These services were claimed as export of services.
The commissioner noted that the services are not being provided to an individual as the recipient of services and also, more importantly, the physical presence of the recipient or the person acting on his behalf is not at all required with the supplier of the services. Ialso observe that the appellant department has failed to adduce any credible evidence in the support of their contentions.
The commissioner found that the department is confused between the place of performance of service and the place of provision of services. The research is being done in India but the recipient is based in Germany and accordingly by virtue of sub-section (2) of Section 13 of the IGST Act, 2017 the place of supply shall be Germany i.e. outside India.
The commissioner held that the place of supply in the case of Research and development services to the pharmaceutical sector has been held to be the location of the recipient of the services in the case of, inter alia, Discovery and development of molecules by the pharmaceutical sector for medicinal use.
Facts
The appellant has filed the above stated two refund claims against the accumulated ITC on account of export of Services without payment of Tax. The two refund claims were sanctioned to the appellant by the adjudicating authority.
The department contended that as per the provisions of Section 2(6) of the IGST Act, 2017, inter alia, one of the major conditions to qualify as export of services is that the place of supply of services should be out-side India. The place of supply of services in respect of the services provided by M/s. Curadev Pharma Private Limited is not outside India as the case appears to be covered under
Section 13 (3) (b) of the IGST Act, 2017 and thus conditions of export provided under Sub Section 6(iii) of Section 2 of the Integrated Goods & Services Tax Act, 2017 is not fulfilled. Therefore, the services so provided covered under the impugned refund claim do not qualify as export of services and hence no refund was admissible to the claimant.
Conclusion
The Commissioner rejected both the appeals filed by the department through the Assistant Commissioner. The orders were passed by the Assistant Commissioner, CGST, Div-VI, Noida sanctioning the two refund claims in the case of M/s Curadev Pharma Pvt. Ltd., B-87, Sector-83, NOIDA was held as just legal and proper and needed no intervention.
Case Details
Case Name: PCCGST Noida v/s M/s Curadev Pharma Pvt Ltd
Citation: NOI-CGST-01-APPL-2023-24
Coram: Darpan Amrawanshi, Joint Commissioner, CGST
Tribunal: CGST Appeals Noida
Date Of Decision: 28.12.2023
