In re Epigeneres Biotech Private Limited (GST AAR Maharashtra)
The Maharashtra Authority for Advance Ruling (AAR) has determined that the cancer prognostic and diagnostic services provided by Epigeneres Biotech Private Limited do not qualify for exemption from Goods and Services Tax (GST) under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate). The AAR ruled that the applicant’s algorithm-based technology for early cancer detection, which involves blood tests and next-generation sequencing data analysis, is currently in the realm of research and development rather than a validated healthcare service.
Epigeneres Biotech sought a ruling on whether its diagnostic services would be exempt under the GST notification that provides exemption to “health care services by a clinical establishment, an authorised medical practitioner or para medics” classified under Service Accounting Code (SAC) 9993. The notification defines “health care services” as diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy in any recognized system of medicine in India, including patient transportation but excluding cosmetic procedures unless reconstructive. A “clinical establishment” is defined as a hospital, nursing home, clinic, or any institution offering diagnostic or treatment services.
The AAR observed that while Epigeneres Biotech is involved in cancer diagnosis, the specific HrC scale marker test co-developed by the applicant is still in its developmental stage and lacks validation from Indian medical regulatory bodies such as the Central Drugs Standard Control Organisation (CDSCO) or the Indian Council for Medical Research (ICMR). The AAR emphasized that for a service to qualify as a “health care service,” the diagnosis must be recognized and validated by the medical fraternity and regulatory authorities. In the absence of such validation, the tests conducted by Epigeneres Biotech are considered to be clinical research and development rather than a recognized diagnostic service.
The AAR noted that Epigeneres Biotech had not provided any license or certificate from CDSCO to conduct its tests as a diagnostic laboratory, nor any approval from ICMR recognizing the HrC test as a valid diagnostic tool for cancer detection. Under the Medical Devices Rules, 2017, in vitro diagnostics (IVDs), including cancer biomarker tests, are classified as medical devices and regulated by CDSCO, requiring manufacturers and importers to obtain licenses and comply with quality standards. The AAR found that the applicant had not furnished evidence of such compliance or licensure.
Consequently, the AAR concluded that the services provided by Epigeneres Biotech are more appropriately classified under SAC 998111, which pertains to “Research and Experimental Development in natural sciences,” specifically including testing related to DNA/RNA like genomics and sequencing in medical sciences. The explanation of this SAC code encompasses basic and applied research aimed at acquiring new knowledge and experimental development directed towards new materials, products, and services in areas like biotechnology and gene technology. As the applicant’s primary activity is the research and experimental development of cancer prognostic and diagnostic technologies, it falls under this SAC and is therefore not eligible for the GST exemption provided under Notification No. 12/2017 for healthcare services.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
