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2019 (10) TMI 1093 - AAR - GSTLevy of GST - On Job trainee - pure agent - It will be paid monthly stipend amount determined by the client and Trust. The Trust is expected to collect stipend amount from the client and transfer the entire amount to the trainee - Does this stipend reimbursement attracts GST or not? - HELD THAT - The activities of the applicant are not related to any activity listed under charitable activities , the activities of the applicant cannot be covered under entry no.1 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - The applicant is a facilitator under NEEM and this scheme is envisaged by the Government of India in collaboration with AICTE. But he has not given evidences on the issue whether he is a training partner approved by the National Skill Development Corporation or Sector Skill Council or is a training provider under Deen Dayal Upadhyaya Grameen Kaushalya Yojana. Hence he is not covered by any exemption entries in Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. Taxation of stipend - HELD THAT - The company which is providing on the job training to the trainees is required to pay the stipend to the trainees and the applicant is only acting as an intermediary in collecting the same from the trainer companies to the students. The service is provided by the trainees to the trainer as the trainer is liable to make payment of the consideration. This consideration is paid through the applicant and the applicant is not allowed to make any deductions in that amount. Hence the applicant is only a conduit for the payment and the actual service is by the trainee to the trainer. Therefore this amount is not taxable in the hands of the applicant. The Trust is expected to keep training the trainee for acquainting the skills and enhancement of employability. The Trust will charge a predetermined training charges - Does this attract GST or not? - HELD THAT - The applicant is providing additional training to the trainees and the consideration for the same is charged to the companies where the trainees will go for on-job training and skill development. This consideration is not exempted under Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and hence is taxable under entry no. 35 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 and liable to tax at the rate 9% under CGST Act and similarly taxable at 9% under the Karnataka Goods and Services Tax Act, 2017 under entry no.35 of Notification (12/2017) No.FD 48 CSL 2017 dated 29.06.2017. The Trust also obtains Group Health Insurance Policy and Workman Compensation Policy for the trainee s deployed at client place. Trust recovers this amount on monthly basis, the rate which is determined based on the premium amount. - Does this attract GST or not? - HELD THAT - If any tax is liable on this transaction, it shall be collected by the insurance company, and the insurance company would be the service provider and the applicant will be the service recipient. If the same is reimbursed to the applicant by the trainer company as per the terms of the contract, this amounts to reimbursement of the premium paid and hence this amount reimbursed would not be taxable in the hands of the applicant. The Trust is also obliged to recover the expenditure, then against on boarding the trainee - Does this attract GST or not? - HELD THAT - The applicant is also collecting certain amount from the trainer company for the purposes of sourcing trainees. This amount is a mutually agreed amount as per the contract between the applicant and the trainer company and is a supply of service by the applicant to the trainer company. This supply is covered under SAC 998519 and is liable to tax at 9% CGST under entry no. 23(ii) of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. Similarly it is taxable at 9% under the Karnataka Goods and Services Tax Act, 2017 under entry no. 23(ii) of Notification (12/2017) No.FD 48 CSL 2017 dated 29.06.2017. If client finds our trainee suitable for absorption of the roles of the Company, trust would like to charge certain amount on-Rolls conversion charges - Does this attracts GST or not? - HELD THAT - The applicant collects a onetime charge if a trainee sourced by the applicant is selected and absorbed by the company into regular employment. This service is also covered under SAC 998519 and is liable to tax at 9% CGST under entry no. 23(ii) of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. Similarly it is taxable at 9% under the Karnataka Goods and Services Tax Act, 2017 under entry no. 23(ii) of Notification (12/2017) No. FD 48 CSL 2017 dated 29.06.2017.
Issues Involved:
1. Taxability of stipend reimbursement. 2. Taxability of training charges. 3. Taxability of Group Health Insurance and Workman Compensation Policy premiums. 4. Taxability of expenditure recovery for onboarding trainees. 5. Taxability of on-rolls conversion charges. Issue-wise Detailed Analysis: 1. Taxability of Stipend Reimbursement: The applicant, a registered trust under Section 12A of the Income Tax Act, 1962, is engaged as a NEEM (National Employability Enhancement Mission) Facilitator. Under NEEM, the applicant facilitates on-the-job training for trainees. The stipend paid to the trainees by the companies through the applicant is not subject to GST. The applicant acts as a pure agent, merely collecting and transferring the stipend without making any deductions. Hence, the reimbursement of the stipend paid to the trainees does not attract tax under the GST Acts. 2. Taxability of Training Charges: The applicant provides additional training to the trainees, and the companies pay a predetermined training fee for this service. This training fee is not exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Therefore, it is taxable under entry no. 35 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 at a rate of 9% under the CGST Act and similarly at 9% under the Karnataka Goods and Services Tax Act, 2017. 3. Taxability of Group Health Insurance and Workman Compensation Policy Premiums: The applicant arranges Group Health Insurance and Workman Compensation policies for the trainees, with the premiums being reimbursed by the trainer companies. The insurance company is the service provider, and the applicant is the service recipient. The reimbursement of these premiums by the trainer companies to the applicant is not liable to tax under the GST Acts. 4. Taxability of Expenditure Recovery for Onboarding Trainees (Sourcing Fees): The applicant collects a sourcing fee from the trainer companies for the purpose of sourcing trainees. This fee is a mutually agreed amount as per the contract and is classified under SAC 998519. It is liable to tax at 9% CGST under entry no. 23(ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and similarly at 9% under the Karnataka Goods and Services Tax Act, 2017. 5. Taxability of On-Rolls Conversion Charges: When a trainee sourced by the applicant is absorbed into regular employment by the company, the applicant charges a one-time "on-rolls conversion fee." This service is also classified under SAC 998519 and is liable to tax at 9% CGST under entry no. 23(ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and similarly at 9% under the Karnataka Goods and Services Tax Act, 2017. Ruling: 1. The reimbursement of the stipend paid to the trainees does not attract tax under the GST Acts. 2. The additional training to the trainees for which the training fees are paid by the trainer is taxable at 9% under both the CGST Act and the Karnataka Goods and Services Tax Act, 2017. 3. The reimbursement of Group Insurance and Workmen Compensation premiums by the trainer company to the applicant is not liable to tax under the GST Acts. 4. The sourcing fees collected by the applicant from the trainer companies are liable to tax at 9% under both the CGST Act and the Karnataka Goods and Services Tax Act, 2017. 5. The "on-rolls conversion charges" collected by the applicant from the trainer companies are liable to tax at 9% under both the CGST Act and the Karnataka Goods and Services Tax Act, 2017.
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