An Indian clinical-trial service is an export under GST only if it meets all five conditions in section 2(6) of the IGST Act, including that its place of supply is outside India. A foreign sponsor or payment in foreign currency is not enough. The place-of-supply analysis depends on the service actually supplied, the trial goods and their custody, the provider’s role, the parties’ relationship, and the applicable law for the relevant period.
The five conditions for an export of services
Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) defines an export of services through five cumulative conditions. Each must be satisfied; failure of any one means the supply does not meet that definition.
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- The supplier of the service is located in India.
- The recipient of the service is located outside India.
- The place of supply of the service is outside India.
- Payment is received in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India.
- The supplier and recipient are not merely establishments of a distinct person under the statutory explanation.
The IGST Act is the starting point. Establish who supplies and receives each material service, then test each condition against the contract and actual performance. A foreign contracting entity, foreign sponsor, or foreign-currency invoice does not by itself settle the place of supply or the other statutory requirements.
Why place of supply is often the key question
For services supplied to a recipient outside India, section 13 of the IGST Act generally places the supply at the recipient’s location, unless a more specific rule applies. Clinical-trial work can raise questions about section 13(3)(a), which concerns services supplied in respect of goods that must be physically made available by the recipient to the supplier, or to a person acting on the supplier’s behalf, to provide the service.
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An investigational product being present at a trial site in India is a relevant fact, but its presence alone should not be treated as automatically deciding the issue. Identify who provides the product, who holds or controls it during the work, how the service relates to it, and whether the statutory rule or an applicable exception or notification governs the particular service and period.
- Map the goods: identify investigational products and other relevant goods, who supplies them, where they are during the work, and who has custody or control.
- Map the work: identify where trial activities occur and which entity performs each activity.
- Separate deliverables: distinguish materially different services instead of assuming every task under a clinical-trial contract has the same classification.
- Check the law for the relevant period: review the applicable statutory text, notifications, and later decisions before reaching a conclusion.
What the Cliantha ruling does—and does not—show
In its 4 May 2019 ruling in Cliantha Research Limited, the Maharashtra Authority for Advance Ruling concluded that the clinical trials and support services before it, performed at the applicant’s facilities in India, had a place of supply in India and did not qualify as export services. The order is a significant example of how the place-of-supply question has been treated in a clinical-research dispute; it is not a blanket answer for every CRO, contract, service mix, or later tax period. The GST Council case index records the dispute, and the Council also has an Asiatic Clinical Research case record.
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A later development also needs careful treatment. The online record for a 2025 Karnataka High Court matter involving Iprocess Clinical Marketing refers to clinical trials, sections 13(2) and 13(3)(a), and Notification No. 04/2019-Integrated Tax. The record includes an argument about the notification’s scope and retrospective effect; that argument alone does not establish the notification’s full text or the court’s final holding. Do not infer a universal outcome from that record. Check the judgment record against the full judgment and the applicable official notification for the period at issue.
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Distinguish research performed on the CRO’s own account from intermediary activity
The IGST Act defines an intermediary to include a broker, agent, or other person who arranges or facilitates a supply between two or more persons, while excluding a person who supplies the relevant goods or services on its own account. A CRO undertaking responsibility for a research service or defined deliverable is analytically different from a provider whose role is to arrange or facilitate another person’s supply.
Review the principal service, contractual obligations, actual responsibilities, and how the parties interact. CBIC Circular 107/26/2019-GST says intermediary status depends on the facts and circumstances, including identification of the principal or main supply. If the intermediary rule in section 13(8)(b) applies, the place of supply is the supplier’s location; for an Indian supplier, that can prevent the place-of-supply condition for export from being met. See Circular 107/26/2019-GST and the CBIC sectoral FAQ.
| Question | Research service on own account | Potential intermediary role |
|---|---|---|
| What is the provider responsible for? | Delivering its own contracted research service or work product. | Arranging or facilitating a supply between other persons. |
| What evidence should be reviewed? | Scope of work, performance obligations, deliverables, and responsibility for the work. | Whether the provider’s role is mainly to connect or facilitate parties rather than supply the principal service itself. |
| Why does the distinction matter? | The ordinary place-of-supply analysis for the service remains to be applied. | If section 13(8)(b) applies, place of supply is the supplier’s location, potentially defeating the export condition for an Indian supplier. |
Check the recipient entity and payment path separately
Identify the actual recipient and group relationship
Use the contract, work orders, invoices, and actual service arrangements to identify the recipient—not just the sponsor’s familiar business name. If the recipient is a foreign group company, test the distinct-person condition separately. CBIC Circular 161/17/2021-GST addresses supplies by an Indian subsidiary or group company to a foreign group company; apply its clarification to the actual corporate structure rather than assuming that every affiliate transaction is excluded. See Circular 161/17/2021-GST.
Reconcile consideration and any offshore subcontracting
Trace the contractual price, invoiced amounts, work performed by subcontractors, and actual payment flows. Where the foreign recipient pays an overseas subcontractor directly for part of the contracted work, Circular 78/52/2018-GST explains conditions under which that amount can count as consideration for export services. Do not assume that a direct offshore payment either automatically qualifies or automatically disqualifies the service; compare the arrangements with the circular’s conditions. See Circular 78/52/2018-GST.
A practical sequence for assessing a contract
- Break down the supply. Read the master services agreement, work orders, statements of work, and invoices. List each materially distinct service and identify the contracting supplier and recipient for it.
- Record who performs the work. Identify the CRO, trial sites, investigators, and other providers, and document each party’s responsibilities and deliverables.
- Trace the trial goods. Record who provides each investigational product or other relevant good, where it is during the service, and who makes it available to whom.
- Apply the place-of-supply rules. Start with section 13’s general recipient-location rule, then assess whether a more specific provision, exception, or notification applies to the service and period.
- Test intermediary status. Determine whether the Indian provider supplies the research service on its own account or arranges or facilitates a supply between other persons.
- Verify the remaining export conditions. Confirm the supplier’s and recipient’s locations, the payment method and receipt, and the corporate relationship under the distinct-person test.
- Check applicable authorities by date. Review the relevant statutory text, notifications, and decisions for the contract period; do not treat an applicant-specific ruling or a party’s argument in a case record as a universal rule.
- Keep the evidence together. Retain the contract and amendments, work orders, service and site records, product-custody records, invoices, corporate details, subcontracting terms, and bank or payment records.
What the answer means for GST treatment
Only a supply meeting all five statutory conditions is an export of services under section 2(6). If the place of supply is in India or another condition fails, the supply does not qualify under that definition. The practical consequences for tax payment, a letter of undertaking (LUT), or a refund depend on the applicable rules and the taxpayer’s facts. CBIC publishes GST refund rules; check the current provisions and filing requirements rather than assuming that an export classification alone resolves refund eligibility.
Because the result can turn on contract wording, product custody, provider role, group structure, payment flows, and the effective date of a notification, obtain transaction-specific Indian GST advice before fixing the treatment for a live arrangement.
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