No ITC on IGST for Free Clinical Trial Drugs | AAR

Case Details: PPD Pharmaceutical Development India (P.) Ltd., In re - [2025] 175 taxmann.com 711 (AAR-MAHARASHTRA)

Judiciary and Counsel Details

• D.P. Gojamgunde & Ms Priya Jadhav, Member

Facts of the Case

The applicant, acting as a clinical research organisation, imported sample drugs for clinical trials in India and supplied such drugs free of cost to hospitals and clinics. The applicant sought a ruling on the admissibility of input tax credit (ITC) of IGST paid on import of these sample drugs. The applicant submitted that the sample drugs were supplied without any consideration. The issue for consideration was whether ITC of IGST paid on the import of such drugs, supplied free of cost, would be admissible, and the matter was accordingly placed before the Authority for Advance Ruling (AAR), Maharashtra.

AAR Held

The AAR Maharashtra held that the drugs supplied by the applicant free of cost to hospitals and clinics were in the nature of free samples or supplies without consideration, and therefore, ITC in respect of such goods would not be available in terms of Section 17(5)(h) of the CGST Act. The AAR further held that the applicant was not entitled to take credit of IGST paid under Section 3(7) of the Customs Tariff Act, 1975 on the import of such sample drugs. The ruling was in favour of the revenue.

List of Cases Referred to

• Kardex India Storage Solution (P.) Ltd., In re [2020] 116 taxmann.com 865/81 GST 339/35 GSTL 424 (AAR – Karnataka) (para 2.16)
• Umax Packaging (A unit of Uma Polymers Ltd.), In re [2018] 100 taxmann.com 398/71 GST 511/20 GSTL 677 (AAR – Rajasthan) (para 2.17)
• Alkem Laboratories Ltd. v. CCE & ST 2022-VIL-790-CESTAT-AHM-CE (para 2.18)
• Thermax Culligan Water Technologies Ltd. v. CCE 2014 (312) E.L.T. 148 (Tri.-Bombay) (para 2.19)
• CCE v. Cadila Healthcare Ltd. [2013] 32 taxmann.com 105 (Gujarat) (para 2.20)
• Kemwell Biopharma Pvt. Ltd. v. CCE & ST, LTU 2017 (47) S.T.R. 70 (Tri. – Bangalore) (para 2.27)
• CCE v. Chamundi Textiles (Silk Mills) Ltd. 2010 (258) E.L.T. 141 (Tri. – Bangalore) (para 2.27).