2025-VIL-174-AAR
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SGST Advance Ruling Authority

GST – Andhra Pradesh AAR - Research and development activities, Scope of Supply, Consideration – Applicant is a research organization, selected by the Ministry of AYUSH (MoA) and the Central Council for Research in Ayurvedic Sciences (CCRAS) to implement research projects under the "Ayurgyan" scheme. The applicant was designated as a sub-nodal agency under CCRAS and received grant funding from the government for executing these projects - Whether the R&D activities undertaken by the applicant for MoA/CCRAS under the grant-in-aid arrangement fall within the scope of 'supply' under Section 7 of the CGST Act, 2017 – HELD – The R&D services, even when not resulting in the transfer of ownership or IP, are nonetheless services under GST - Under sub-section (a) of Section 2(31) of the Act, the consideration for the supply of goods or services may be paid by the recipient or any other person. Hence, even if services supplied by the applicant are not received by CCRAS but are received by the beneficiaries i.e., general public and medicine manufacturers, the amount paid by CCRAS to the applicant is still covered under the definition of ‘consideration’ paid for the said supply of goods or services by the applicant and is coveted in the definition of supply given under Section 7(1) of the Act - The applicant has acknowledged receiving financial assistance from CCRAS for the R&D activities. This financial assistance qualifies as consideration, as per Section 2(31) of the CGST Act - The transaction involves the supply of R&D services for consideration (the grant received from the Government), and it is undertaken in the course or furtherance of business, satisfying the essential elements of 'supply' under the GST law - The research and development activities undertaken by the applicant for MoA/CCRAS under the grant-in-aid arrangement fall within the scope of 'supply' under Section 7 of the CGST Act – Ordered accordingly - If the research and development activity is considered a 'supply', whether it qualifies for exemption under Entry No. 3 or Entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended – HELD - The research and development activities undertaken by the applicant do not qualify for exemption under Entry No. 3 or Entry No. 3A of Notification No. 12/2017-Central Tax (Rate), as amended. The services are not directly related to any function entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution, as required by the exemption entries. The supply is accordingly taxable under GST, and the applicant is liable to discharge GST at the applicable rate.
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