Goods and Services Tax ( GST ) Exemption Notification 04/2019 is not applicable for services of research and development supplied with the ‘Agro-Chemical’ Sector, Tamil Nadu Bench of the (AAR) Authority for Advance Rulings stated.
It was stated by the authority bench that the place of supply stays u/s 13(3) of the IGST Act, 2017, making these services levied to tax.
The Central Government’s GST Notification No. 04/2019 Integrated Tax cited that the place of supply is the location of the service recipient, but it is just related to the research and development services associated with the pharmaceutical sector. The point that the petitioner, the International Institute of Biotechnology and Toxicology (IIBAT), can function pharmaceutical services and is recognized by the National Good Laboratory Practice (GLP) Compliance Monitoring Authority (NGCMA) does not extend the waiving of services generated to the agro-chemical sector.
IIBAT, a society registered under the Tamil Nadu Societies Registration Act, 1975, concentrates on scientific research, non-clinical health, and environmental safety studies.
Even after the worldwide accredited testing services the petitioner has been levying 18% GST on services supplied to sponsors outside India, acknowledging the place of supply is within India u/s 13(3) of the Integrated GST Act, 2017. They obtain the payments in convertible foreign exchange and claim that the effective use of their services is outside India.
As per the authority, Notification No. 04/2019 Integrated Tax, dated September 30, 2019, is particular to the pharmaceutical sector. It does not count the research and development services provided to the agro-chemical sector under agreements with foreign service recipients. No provisions are there to contain the agrochemical sector within the scope of this notification.
The IIBAT contends that they encountered the conditions of GST Notification No. 04/2019 Integrated Tax for services furnished outside India does not hold for the agro-chemical sector.
It was noted by the authority bench that the language notification is clear, applying exclusively to pharmaceutical research and development services.
Therefore, IIBAT services before the agrochemical sector remain levied to tax, and they should continue levying GST at applicable rates.
| Case Title | M/S International Institute of Biotechnology and Toxicology (IIBAT) |
| GSTIN Number | 33AAATF0061E1ZG |
| Date | 11.07.2024 |
| Tamil Nadu AAR | Read Order |
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