Page 185 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] IN RE : DKMS BMST FOUNDATION INDIA 431
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 loca-
tion of the recipient of service or supplier of service is outside India. The appli-
cant submits that the goods are required to made physically available by the re-
cipient 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 actual-
ly performed in case of services supplied in respect of goods which are required
to be made physically available by the recipient of service to the supplier of ser-
vices or to a person [acting] on behalf of the supplier of services in order to pro-
vide the services. In the instant case, the samples are made physically available
by DKMS-BMST to LSL DE, Germany. LSL DE is providing the testing services
on physical product samples made available to them by DKMS-BMST after due
examination and testing of these samples. The testing activities that are carried
out include General Testing, Blood Group Testing, CCR5 Testing, KIR Testing,
CMV IgG Antibody Testing, etc.
8.4 The applicant states that as highlighted in the above process, the
pre-requisite for conducting the HLA testing service is the samples of buccal
swabs/Human DNA etc. Hence it is important for the DKMS-BMST to send the
samples to LSL DE as LSL DE processes the samples received and provides de-
tails of whether a testing of the HLA can be performed on the collected samples.
Once it confirms that the testing can be performed, the samples undergo medical
testing and thereafter a report is generated by LSL DE, Had DKMS-BMST not
shared the physical samples, the testing by LSL DE could not have been possible.
8.5 The applicant states that the facts and situation in the present case
clearly attract the provisions of Section 13(3)(a) of the IGST Act and therefore it is
inferred that the said services of testing of samples, which are required to be
physically made available by the service recipient to the service provider, are
provided outside India, i.e. Germany and therefore not liable to tax. Also on the
basis of the above, the third condition is not fulfilled and hence the said purchase
of HLA testing service is not an import of service under the provisions of GST.
The applicant also reiterates that since the service received is not an import of
service under GST, the provisions of Section 7 and Section 5 shall not be applica-
ble and DKMS-BMST shall not be liable to pay taxes under reverse charge mech-
anism for the purchase of said service.
8.6 Assuming that in case there is a levy of IGST on such services re-
ceived 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 recov-
ers negligible amount from the patients. Additionally, the applicant also high-
lights 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.

GST LAW TIMES  21st May 2020  185