Edited version of private advice

Authorisation Number: 1051860830116

Date of advice: 2 July 2021

Ruling

Subject: GST and the supply of services to assist with a clinical trial

Question

Is GST payable on your supply of services which X has contracted you to perform?

Answer

No.

Relevant facts and circumstances

You are registered for GST.

You are a resident of Australia.

You have entered into the Consulting Agreement (the agreement) with X under which you have been engaged as manager commencing from (date).

X is a foreign/overseas based start-up company which has developed a new product, which is being trialled in hospitals on the Australian mainland in an early stage clinical trial. The product is a new type of medical device (the product). X owns this technology.

You are a consultant and have been engaged by X as an independent contractor to supply services in connection with the clinical trials. You are an intermediary between the company (X) in the overseas country and physicians here in Australia.

The hospitals enter into a clinical trial agreement with X. X funds the clinical trials by paying the hospitals as agreed in the trial agreement. Currently there are clinical trial sites at (number) hospitals. The hospitals are registered for GST.

Trial members

• The trial members are employees of the hospitals at which the trials are being conducted.
• You are not involved in the recruitment process other than simply to inform candidates of what skills/capabilities they will require.
• Usually there are (number) doctors and (number) research co-ordinators/nurses at each site. This varies across sites depending on part time / full time positions etc. The doctors choose their research teams. Typically, a doctor would approach X to be involved with the trial. Once X has spoken with the doctors to obtain the relevant information relating to their experience / hospital capabilities then they can be formally recruited for involvement in the trial. You do not have a lot of involvement in this process.

You have very little direct contact with the hospitals. If there is a new site being considered, you would find the hospital personnel responsible for finance/contracting and forward their details to the X legal/finance team in the overseas country.

X is a non-resident company. X does not have its own offices or staff in Australia. X is not registered or required to be registered for Australian GST.

You received training from X on how to use the product.

Patients enrol (to participate in the clinical trials) with the hospitals.

You perform your services on the Australian mainland. Your agreement contains the following services that you are required to supply to X:

Services to be performed:

Elaboration on the services you provide

You provided the following information on (date) elaborating on what you are required to do under your contract with X.

Task: Driving patient enrolment for X's clinical studies

This involves helping to drive enrolment for the clinical trial by promoting the trial and supporting doctors and research teams to find suitable patients. The way in which you can do this task is by instructing doctors and research teams using slide shows etc. The information is on the clinical trial, how the clinical trial works and what potential benefits it can have for patients. You also help in organising sessions in which such information is given to doctors and research teams.

This task will continue until the trial is complete

The duration of the task is unknown at this stage. The end date is likely early (in a certain year).

The role/involvement of the trial team members in this task is finding suitable patients for enrolment in the trial. These patients have no alternative option to treat the condition.

The hospital is where the clinical trial takes place. There is no direct engagement between you and the hospital. X has a contract with the hospital and; X pays for theatre/research time.

Task: Support clinical cases: case planning, logistics of product availability at site, interaction with site personnel, proctors before, during and after cases

When a patient is enrolled, there are a lot of people who need to be coordinated to enable the treatment to occur.

You help by communicating availability of doctors, international proctors, device shipment, etc to ensure these cases are done smoothly. The proctors are overseas physicians that guide the Australian doctors through the task of treating the patients participating in the trial, drawing on the proctors' prior experience in relation to the type of treatment involved.

You facilitate the live streaming service for the trial team doctors to be proctored from international physicians and experts in the overseas country.

You also schedule the trial team members and prepare the device so it can be used by the trial team members. Your preparation of the device involves you assembling the device. You will show the trial team doctors how to assemble the device so that they can do the remainder of them themselves.

The task is done once a patient is enrolled. This has only occurred twice since you began consulting for X in (month, year).

The duration of this task is variable, however usually once a patient in enrolled they are treated within (number) weeks.

You interact with the following parties in respect of this task:

•         doctors,

•         cath lab coordinators,

•         research nurses,

•         international proctors,

•         live streaming companies, and

•         X

The role of the trial team members in this task is to meet the patient, perform all the necessary tests before enrolment, arrange patient transport, and then together they work as a team to treat the patient in the clinical trial.

The involvement of the hospital in relation to this task is to provide the site where tests and treatment happen. X pays for the patient's visit to the hospital.

X owns all of the clinical data for each patient that is treated.

Task: Provide patient selection recommendations to the study sites

Doctors and research teams are often involved in multiple clinical trials. They need help to remind them of the criteria for the X trial.

They often call you to ask about criteria for certain patients. This is during working hours when is X unavailable (overseas time zone).

This task is done whenever a patient is being considered - during the duration of the trial. The duration of this task is ongoing.

You take phone calls / emails regarding eligibility of certain patient anatomies etc. Often you need to refer these questions to X.

The trial team members role/involvement in this task is finding potentially suitable patients. The trial team members will only ask you if they are unsure about particular criteria relating to the patient condition.

X provides you with the criteria which you are responsible to pass on to the research teams as their main point of contact.

Task: Support clinical affairs when needed with patient follow-up data collection

Data is collected by the clinical affairs team at X from the trial team members. Sometimes they need support to collect the data.

You help X to collect data by speaking with the trial teams (who collect the data in carrying out the clinical trial).

You provide guidance to trial members to ensure data is properly collected and make sure it is sent to the overseas country in a timely manner for analysis.

If there is missing data, you are informed by X and then have the task of retrieving it from the research teams.

You perform this task after a patient is treated or during their follow up visits.

The duration of this task is ongoing.

You interact with X and research teams in respect of this task.

The trial team members collect the data and send it to X.

The hospital provides the place at which the data is collected.

X own the follow up data and request the data they need.

The follow up data is data collected at various intervals after the treatment has been performed on the patients.

Task: Play an active role in technical/clinical feedback regarding product performance

The product is new, so therefore doctors need guidance and feedback on best use and performance of the technology.

You are provided with training and also the feedback from the trials from X which you are then responsible for passing onto the doctors.

This task is ongoing.

You interact with doctors and research teams in respect of this task.

The trial team members are responsible for listening to the feedback required and implementing any changes in their practise if required.

X provides the feedback based on the data they receive.

Task: Collaborate with regulatory and quality assurance team members to assure execution of and feedback regarding product performance and clinical protocol

Quality and regulatory teams at X are responsible for safety of the trial.

You are required to pass on all relevant information from quality/regulatory to the doctors and research teams.

This task is done when/if any safety or device related issues occur.

This task is done during the trial

This task involves you being the main point of communication between X and the research teams and doctors.

The trial team members need to act on any information that is provided by X (via you).

X is responsible for analysing data and updating yourself with any regulatory / quality issues relating to the trial and the device.

Task: Collaborate on creating training materials for hospital personnel

X is ultimately responsible for the instructional materials for doctors and research teams, however it is your responsibility to collaborate with them to ensure it is appropriate for Australia.

You review instructional materials provided by X to ensure they are appropriate for the Australian setting.

This task is done when a new hospital team starts up with the trial.

Instructional documents were completed very early on and took a (number of) weeks.

You pass on the instructional material to the hospital staff once approved,

The trial team members must undergo the instructional material before involvement in the trial.

X provides the instructional material for the trial.

Task: Collaborate on creating documents to support patient referral to the clinical sites

This involves creating informational material to drive referrals for the trial.

You work with X to create informational documents to help referrals to each site.

This task is ongoing.

You deal with mostly research nurses, occasionally doctors in respect of this task.

The trial team members read read/listen to the informational documents you provide them from X.

X provides the informational material.

Task: Play an active role in X's clinical studies extension to new clinical sites

When/if new sites are approached about being part of the trial, you will need to be involved.

You help communicate between X and the hospital teams to ensure both parties are happy and understand requirements etc.

This task is done only when new sites are added (not often).

It is unlikely there will be any more sites added this year.

You interact with doctors, research teams, hospital finance teams in respect of this task.

If someone is keen to be involved in a trial as a trial team member, they will liaise with you as the main point of contact with X.

The finance teams at the hospital deal directly with X regarding funding etc.

X have the final say whether or not a site will be accepted. X will also work with the sites to establish a trial contract

Further information about your activities associated with the clinical trial

You act as the main point of communication for X in Australia (due to time zone differences) - questions are directed at you, which you generally need to pass on to X in the overseas country. This is a task associated with each service you provide as specified in your contract with X.

You keep trial teams up to date with how the trial is going globally and provide relevant updates when required. This task relates to the 4^th to 7^th services listed in your contract with X.

The associated instructions you provide to the doctors on how to use the product is limited. You can inform the doctors and hospital teams about the product (such as what type of material the product is made of and the dimensions)/X. However, as you have had no formal medical training, you cannot provide clinical training or education. For example, you cannot suggest which patients they should be using the product for or what the clinical outcome may be.

There is no structured education or formal training that you deliver. The formal education comes from other physicians or experts in the overseas country. You can relay information from the overseas country as needed.

The services of patient referrals, and study extension to new sites, listed in the agreement, are not relevant right now but could involve you providing hospital teams with information to help promote the trial/product to their patients. This may include providing images etc for slide shows. Study extension to new sites would be in the instance that X wanted to expand the number of hospital sites. In that case you would help with this process by being the point of contact between X and the new site.

Your remuneration

The agreement sets out the amounts that X pays you for your services as follows:

Remuneration:

You do not carry on any other enterprise.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-26

A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision

Summary

GST is not payable on your supply of services to X because it is GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

All legislative references below are to the GST Act.

Detailed reasoning

GST is payable on taxable supplies.

You make a taxable supply if you meet the requirements of section 9-5, which states:

You make a taxable supply if:

(a)       you make the supply for *consideration; and

(b)       you make the supply in the course or furtherance of an *enterprise that you *carry on; and

(c)       the supply is *connected with the indirect tax zone; and

(d)       you are *registered or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

(*Denotes a term defined in section 195-1 of the GST Act)

The indirect tax zone includes mainland Australia and Tasmania and certain other others, but it excludes the Australian external Territories.

You advised that you are an intermediary between X in the overseas country and physicians here in Australia. You are a consultant and have been engaged by X as an independent contractor to supply services in connection

An analysis of the contract you have with X and the other information you provided reveals that you are supplying a service to X of organising, co-ordinating and project managing many aspects of the clinical trials on behalf of X. You interact with trial members in the areas you are responsible for in making sure the clinical trials are carried out as per X's needs and regulatory requirements. Additionally, you are supplying a service of assembling the medical device.

Your supply of services meets the requirements of paragraphs 9-5(a) to 9-5(c). That is:

• you make your supply of the services to X for consideration (the fee you charge)(paragraph 9-5(a)); and
• you supply these services in the course or furtherance of an enterprise that you carry on (paragraph 9-5(b)); and
• your supply of the services is connected with the indirect tax zone as you perform the services on the Australian mainland (paragraph 9-5(c)); and
• You are registered for GST (paragraph 9-5(d)).

There are no provisions of the GST Act under which your services are input taxed.

Therefore, what remains to be determined is whether the services are GST-free.

GST-free supplies

A supply of something other than goods or real property is GST-free under item 2 in the table in subsection 38-190(1) if the supply is made to a non-resident customer who is not in the indirect tax zone when the thing supplied is done; and

(a)       the supply is neither a supply of work physically performed on goods situated in the indirect tax zone when the work is done nor a supply directly connected with real property situated in the indirect tax zone; or

(b)       the non-resident acquires the thing in carrying on their enterprise but is not registered or required to be registered for GST.

However, there are exclusions from GST-free treatment in subsection 38-190(2), 38-190(2A) and subsection 38-190(3)

Of particular relevance to your services is subsection 38-190(3). Subsection 38-190(3) states:

Without limiting subsection (2) or (2A), a supply covered by item 2 in that table is not GST-free if:

(a)       it is a supply under an agreement enter into, whether directly or indirectly, with a *non-resident; and

(b)       the supply is provided, or the agreement requires it to be provided, to another entity in the indirect tax zone; and

(c)       for a supply, other than an *input taxed supply - none of the following applies:

(i)        the other entity would be an 'Australian-based business recipient of the supply, if the supply had been made to it;

(ii)       the other entity is an individual who is provided with the supply as an employee or *officer of an entity that would be an Australian-based business recipient of the supply had the supply been made to it;

(iii)      the other entity is an individual who is provided with the supply as an employee or officer of the *recipient, and the recipient's acquisition of the thing is solely for a *creditable purpose and is not a *non-deductible expense.

You are supplying a clinical trial organising/co-ordination/project management service and a device assembly service to a non-resident (X).

We consider X is not in the indirect tax zone for the purposes of item 2 in the table in subsection 38-190(1).

Paragraphs 37 to 40 of GSTR 2004/7 state:

37. A non-resident company is in Australia if that company carries on business (or in the case of a company that does not carry on business, carries on its activities) in Australia:

(a) at or through a fixed and definite place of its own for a sufficiently substantial period of time; or

(b) through an agent at a fixed and definite place for a sufficiently substantial period of time.

38. We consider that it would be reasonable for a supplier to conclude that a non-resident company is in Australia if:

•         the company is registered with ASIC;

•         the company has a permanent establishment in Australia for income tax purposes.

39. However, a non-resident company to which the supplier makes a supply may be able to demonstrate to the supplier that, even though it is registered with ASIC or has a permanent establishment, on application of the test (at paragraph 37) to its particular circumstances, the non-resident company is not in Australia.

40. Suppliers should be aware that even if a company is not registered with ASIC, it may still be in Australia on an application of the test (at paragraph 37). Similarly, even if a company does not have a permanent establishment in Australia for income tax purposes, it may still be in Australia on application of the test to its particular circumstances.

In accordance with GSTR 2004/7, a non-resident will have place 'of its own' in Australia for the purposes of paragraph 37 of GSTR 2004/7 if it has a place in Australia at its disposal. It need not own or have a leasing interest or any other interest in the property.

Paragraph 253 of GSTR 2004/7 states:

253. A non-resident company clearly has a place of business of its own if it leases or owns a place at which it conducts business through its servants or agents. However, a place of its own is not limited to such a place. A non-resident company occupies a place as a place of its own if it has a right to be there. Evidence of that right is generally to be found in the fact that the company's employees or agents occupy that place for the purposes of its business.

X does not have an office in Australia at its disposal or staff based in Australia.

X is not carrying on any business or any type of enterprise in the Australia through the hospital sites. The clinical trials are undertaken by the hospitals through the trial team members, who are employees of the hospitals and using the hospitals' premises.

Although X's product is being trialled at the Australia hospitals, X is not carrying on a business or enterprise in Australia through the hospitals as agents. The hospitals are merely providing a service to X in the course of the hospitals' enterprises.

X is not carrying on business or enterprise in Australia through you as agent. X is a customer of yours and you are providing your clinical trial organisation/co-ordination/project management services and device assembly services in the course of your own enterprise.

Therefore, X is not in the indirect tax zone for the purposes of item 2.

X acquires your services in carrying on its enterprise but is not registered or required to be registered for GST.

As such, your services meet the requirement of paragraph (b) in item 2.

The exclusions at subsections 39-190(2) and 38-190(2A) are not applicable to your case.

Subsection 38-190(3)

You are making a supply under an agreement you have with a non-resident (X). Therefore, the requirement of paragraph 38-190(3)(a) is met.

Paragraphs 59 to 62 of Goods and Services Tax Ruling GSTR 2005/6 discuss the meaning of 'provide to another entity'. They state:

The meaning of 'provided to another entity''

59. The word 'provided' is used in subsection 38-190(3) to contrast with the term 'made' in item 2. In the context of section 38-190, the contrasting words indicate that if a non-resident contracts for a supply to be provided to another entity, the place of consumption should be determined with regard to the entity to which the supply is provided, not the entity to which the supply is made.

60. The example in the Explanatory Memorandum accompanying the Bill that introduced subsection 38-190(3) illustrates this. In that example, non-resident parents contract for the supply of education services to be provided to their children in Australia. The contractual flow of the services is to the parents, while the actual flow of the services is to the children. The supply is made to the parents (non-residents) and provided to another entity, each child, in Australia.

61. Thus the expression 'provided to another entity' means, in our view, that in the performance of a service (or in the doing of some thing), the actual flow of that supply is, in whole or part, to an entity that is not the non-resident entity with which the supplier made the agreement for the supply. The contractual flow is to one entity (the non-resident recipient) and the actual flow of the supply is to another entity.

62. For example, if a supply of entertainment services is made to a non-resident company and in the performance of that service the employees are the entities that are entertained, the actual flow of that service is to another entity, each employee (see above where the meaning of 'another entity' is discussed). The supply is made to the non-resident company (the employer) and provided to another entity (each employee).

Paragraphs 64 and 65 of GSTR 2005/6 provide guidance on the meaning of 'the agreement requires the supply to be provided to another entity in Australia'. They state:

64. The agreement refers to the agreement entered into with a non-resident, whether directly or indirectly (refer to paragraph 39).

65. We consider that an agreement requires that a supply be provided to another entity in Australia if it is an express or implied term of the agreement that the supply is to be provided to another entity in Australia.

Paragraphs 66 to 73 of GSTR 2005/6 provide further guidance on determining whether a supply is provided to 'another entity'. They state:

66. Before it can be determined whether a supply is provided (or is required to be provided) to another entity, it is essential that the supply be properly characterised as the supply of a service, right or some other thing. It is only when the supply is properly characterised that it is possible to determine whether that supply is provided to another entity.

67. In characterising a supply it is necessary to consider all the circumstances of the transaction to ascertain its essential character.

68. Further explanation and examples about characterising a supply are provided at paragraphs 261 to 275, Part II of the Explanation section of this Ruling.

The nature of the supply

69. It is also necessary to establish the exact nature of the supply to determine to which entity that service or thing is provided. That is, it is necessary to establish what is really being supplied.

70. A clear understanding of the exact nature of the supply is essential to determining whether that supply is provided to another entity. It is only by having regard to what is in substance and reality being supplied that it is possible to identify to which entity that supply is provided.

71. The exact nature of a supply in any given situation depends on the facts and circumstances of the supply and the agreement made between the parties. In this regard, it is necessary to look at the whole arrangement for the supply (including the contractual arrangements) and the way in which the supply is carried out.

72. If there is no written contract, other documents such as correspondence between the parties may be useful in establishing the nature of the supply.

73. Thus, the focal point in working out whether a supply is provided to another entity is the facts and circumstances of the doing of the thing supplied. By the supplier examining what it is required to do and in what circumstances, the supplier is able to objectively determine to whom the supply is provided.

In accordance with paragraph 67 of GSTR 2005/6, in determining whether a supply which is made to a non-resident is provided to another entity, we need to determine the essential character of the supply.

The essential character of the supply you make to X is a supply of a service of organising, co-ordinating and project managing the clinical trials as well as assembling the medical device. You are not supplying education or training services to X to provide to trial members or to the hospital given that you are not medically qualified or the expert.

Paragraphs 662 to 662B of GSTR 2005/6 discuss the situation where a supply is provided to multiple entities. They state:

662. Sometimes a supply of services might, for example, be made and provided to a non-resident entity that is not in Australia and also provided to another entity in Australia in circumstances where the supply is not divisible with separate parts of the supply being provided to each entity. Section 9-5 provides that a supply is not a taxable supply to the extent that it is GST-free (or input taxed).

662A. As explained at paragraph 66 of GSTR 2006/4 the High Court in Ronpibon Tin v. FC of T (Ronpibon Tin) indicated, in the income tax context, that if a certain expense, such as directors' fees, has a 'double aspect', it will need to be apportioned if it 'cannot be dissected'. As further explained in GSTR 2006/4 the High Court also emphasised the necessity of considering the facts of the particular case.

662B. Thus if a supply is provided to both a non-resident entity outside Australia and another entity in Australia, but it cannot be said that there are separate and distinct parts of the supply provided to each entity, that supply is nonetheless apportionable on a fair and reasonable basis.

Paragraphs 663 to 671 of GSTR 2005/6 state:

Example 43 - supply of pathology services made and provided to a non-resident and also required to be provided to another entity in Australia

663. A non-resident pharmaceutical company runs a global clinical trial for a new drug. Australian medical practitioners engaged by the pharmaceutical company are responsible for recruiting and monitoring the Australian patients included in the trial. The company does not carry on business in Australia either through a place of business of its own or through any agent acting on its behalf.

664. The non-resident pharmaceutical company contracts with an Australian pathology company for the testing of samples from the Australian patients. The testing of samples is part of the pharmaceutical company's assessment of the effectiveness of the drug and the medical practitioners' services of monitoring the health of their trial patients, as required under the contract with the pharmaceutical company. It is essential to the performance of the contract between the non-resident pharmaceutical company and the Australian medical practitioners that the pathology services are carried out for both the Australian medical practitioners and the non-resident pharmaceutical company.

Item 2

665. The supply of pathology services is made to the non-resident pharmaceutical company that is not in Australia. The supply satisfies the requirements of item 2 and is, therefore, a supply covered by item 2. The supply is not a supply of work physically performed on goods. The supply is a supply of information that involves work to produce that information and thus the supply is one of performing services.

Subsection 38-190(3)

666. The supply of pathology services by the Australian pathology company to the non-resident pharmaceutical company is a supply under an agreement entered into with a non-resident. Paragraph 38-190(3)(a) is therefore satisfied.

(i) Provided to another entity

667. The pathology service is a service of carrying out certain tests and preparing a report. The service as a whole (the testing and the report) is carried out as part of the drug company assessment of the effectiveness of the new drug and the medical practitioners monitoring of the health of their patients involved in the drug trial, as required under the terms of their contract with the non-resident pharmaceutical company. The medical practitioners are not merely supplied with a copy of the report for interest only. If the medical practitioners did not receive the pathology reports commissioned by the non-resident company, each practitioner would need to order his or her own pathology tests in monitoring the patients' health, as required.

668. In this circumstance the supply of pathology services is provided to both the non-resident pharmaceutical company and the Australian medical practitioners.

669. To the extent that the supply of pathology services is provided to each medical practitioner those services are provided to another entity.

(ii) Provided to that other entity in Australia

670. To the extent that the supply of pathology services is provided to each medical practitioner those services are provided to another entity in Australia. To this extent subsection 38-190(3) negates the GST-free status of the supply of those services from the pathology company to the pharmaceutical company. To the extent that the supply of pathology services is provided to the non-resident pharmaceutical company outside Australia subsection 38-190(3) does not negate the GST-free status of the supply of those services.

671. The consideration for the supply is required to be apportioned between the GST-free part of the supply (that part of the supply that is provided to the non-resident pharmaceutical company) and the taxable part of the supply (that part of the supply which is provided to the Australian medical practitioners). Apportionment is required on a fair and reasonable basis taking into account the particular facts of the case. In the circumstances of this case the Australian pathology company might take into account how many medical practitioners in Australia are supplied with the results of the tests (taxable part of the supply) as against the supply to the non-resident pharmaceutical company outside Australia (GST-free part of the supply) in apportioning the consideration received for the supply.

The purpose of the trials in your case is to generate data on the efficacy and safety of X's medical product. The data is forwarded by the trial team members to X so that X can assess the performance of their product. You assist both directly and indirectly with the collection of the trial data and forwarding it to X. Therefore, you are supplying a service of organising, co-ordinating and project managing the clinical trials to X and you provide this supply to X as the actual flow of this supply is to X. At the same time, you are providing your supply of these services to the hospitals as the hospitals are running the clinical trials and your services of organising, co-ordinating and project managing assist the hospitals to perform the trials.

Your service of assembling the medical device indirectly assists with the collection of trial data, which is forwarded to X to assess the performance of their product, given that the data is generated from the trials and it is essential that the device is assembled in order to conduct the trial. Therefore, by assembling the medical device, the supply involved is provided by you to X. At the same time, you are providing this supply to the hospitals as the hospitals are running the trials and your service of assembling the device assists the hospitals to conduct the trials.

As explained above, the supply you make to X is partly provided by you to the hospitals which are different entities to X, being the non-resident with whom you have your contract. The hospitals are in the indirect tax zone. Therefore, the requirement of paragraph 38-190(3)(b) is met.

The supply you make is not input taxed.

In accordance with section 9-26 of the GST Act, the hospitals would have been Australian-based business recipients of the supply you make, if the supply had been made to the hospitals, as:

•         the hospitals carry on enterprises in the indirect tax zone; and

•         the hospitals are registered for GST; and

•         the hospitals' acquisition of the things supplied would not have been solely of a private or domestic nature.

Therefore, subsection 38-190(3) does not operate to preclude your supply of services from being GST-free under item 2. No other exclusions from GST-free treatment under item 2 apply. Hence, your supply of services to X is GST-free.

Therefore, GST is not payable on your supply of services to X.