2020 (3) TMI 70 - AAR - GST

Benefit of exemption from GST - skill development training - services provided under sub-contract to main contractor, who in turn provides to M/s Maharashtra State Skill Development Society (MSSDS), in respect of training of Building and other construction workers (skill development training) - Applicability of I. No. 69 and Si No. 72 of the notification 12/2017- Central Tax (Rate) New Delhi, dated 28th June, 2017. HELD THAT - The tender has been called by Maharashtra State Skill Development Society, Skill Development and Entrepreneurship Department, Government of Maharashtra which is neither NSDC nor a SSC. The tender was meant for empanelment of Training Providers . The applicant has not furnished any documentary evidence so as to arrive at whether the main contractor qualifies to be a training partner, approved by either NSDC or SSC, or not. Further the training providers are not entitled for exemption under the entry No.69. Therefore the main contractor, in case if they get the said work, would not be entitled for exemption under this entry for the said work. Entitlement of exemption to the main contractor under entry No. 72, of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT - In the instant case, the main contractor, if they get the work, would be providing service, of training for Recognition of Prior Learning (RPL) to construction workers, to the Government of Maharashtra, for which total expenditure is to be borne by the Government of Maharashtra. Therefore the main contractor would be eligible for exemption under entry No.72 of the said notification, subject to fulfillment of the aforesaid conditions. Whether the exemption that is applicable to the main contractor is applicable to the applicant or not? - HELD THAT - In the instant case though the services to be provided by the applicant would be under training programme for Recognition of Prior Learning (RPL) to construction workers, the services would be provided to the Main Contractor i.e. the recipient of the services would be the Main contractor, but not the State Government. Therefore the required conditions are not fulfilled and hence the applicant is not entitled for exemption under entry No.72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Thus, the services to be provided by the applicant are taxable at 18% IGST or 9% each of CGST KGST.

Summary

Issues:
Rate of tax applicable on services provided under sub-contract to main contractor for training workers and admissibility of SI. No. 69 and SI No. 72 of Notification 12/2017-Central Tax (Rate).

Analysis:
The applicant sought an advance ruling on the tax rate for services provided under a sub-contract to the main contractor for training workers and the applicability of SI. No. 69 and SI No. 72 of Notification 12/2017-Central Tax (Rate). The applicant claimed that the main contractor is eligible for exemption under SI. No. 69 or SI. No. 72 based on the nature of services provided. They relied on a ruling from Madhya Pradesh Advance Ruling Authority to support their interpretation of the law.

During the personal hearing, the applicant's representative reiterated the facts and submissions. They argued that the services provided under the sub-contract should also be exempted based on the exemption granted to the main contractor. They emphasized that the services are ultimately provided to the Government of Maharashtra under a training program funded by the state government.

The Authority considered the submissions and relevant facts. They analyzed the provisions of the CGST Act and the KGST Act, noting that the two statutes are similar. The Authority examined the entitlement of the main contractor for exemption under SI. No. 69 and SI No. 72 of the Notification. They found that the main contractor would not be eligible for exemption under SI. No. 69 but could qualify for exemption under SI No. 72 if certain conditions were met.

The Authority concluded that the exemption applicable to the main contractor was not extended to the applicant as the services were not directly provided to the State Government. Therefore, the services to be provided by the applicant under the sub-contract were deemed taxable at 18% IGST or 9% each of CGST & KGST. The ruling stated that SI. No. 69 or SI. No. 72 of Notification 12/2017-Central Tax (Rate) were not applicable to the applicant.

In summary, the Authority ruled that the rate of 18% GST applied to the services to be provided under the sub-contract to the main contractor for training workers, and the exemptions under SI. No. 69 or SI. No. 72 of Notification 12/2017-Central Tax (Rate) did not apply to the applicant based on the specific circumstances and conditions outlined in the ruling.