2021 (8) TMI 1018 - AAR - GST

Levy of GST - reimbursement by Industry Partner to the applicant, of the stipend paid to students - HELD THAT - As per the agreements entered into with industry partners as a NEEM agent they prepare monthly attendance record of the trainees, getting it certified from the Company; process stipends of the trainees; make payment of stipend to the trainees in their individual bank accounts; provide uniform and safety shoes (as per requirement of industry partner) to the trainees; take Insurance policies towards Employee Compensation and Personal Accident Policy for trainees. The applicant, is registered as Agent under National Employability Enhancement Mission ( NEEM') for facilitating and extending support for mobilizing trainees under NEEM Scheme of Government of India as per regulations under notification issued by All India Council for Technical Education (AICTE), for providing trainees on-the-job practical training in industries to enhance their future employability, For that purpose, for which they enter into agreements with various companies/ organizations (called as industry partner) who impart actual practical training to the students. The stipend is not directly paid to the trainees by the companies, rather the same are routed through the applicant. The applicant has submitted that the entire amounts received as stipend from the companies are paid to the trainees without any amount being retained. Thus, it is seen that the applicant is only acting as an intermediary in collecting the stipend from the companies and then disbursing the same to the trainees in full since the applicant is not allowed to make any deductions from the stipend before disbursing the same to the trainees - The applicant is only a conduit for the payment of stipend and the actual service is supplied by the trainees to the trainer Companies (industry partners) against which stipend is payable. Hence the amount of stipend received by the applicant from the industry partners and paid in full to the traniees, is not taxable at the hands of the applicant. The reimbursement by Industry Partner to the applicant(YAS), of the stipend paid to the trainees, does not attract tax under the GST Acts.

Summary

Issues Involved:
1. Whether the reimbursement by Industry Partner to YAS of the stipend paid to students attracts GST?
2. Whether the reimbursement by Industry Partner to YAS of the insurance premium attracts GST?
3. Whether the reimbursement by Industry Partner to YAS of the expenses for uniform and safety shoes attracts GST?

Detailed Analysis:

1. Reimbursement of Stipend Paid to Students:
The applicant, Yashaswi Academy for Skills (YAS), acts as an intermediary under the National Employability Enhancement Mission (NEEM) scheme, facilitating on-the-job training for students by partnering with various industry partners. YAS is responsible for preparing attendance records, processing, and disbursing stipends, providing uniforms and safety shoes, and taking insurance policies for trainees. The industry partners reimburse YAS for these expenses.

The core issue is whether the reimbursement of the stipend paid to students by the industry partner attracts GST. The applicant contends that they act as a "pure agent" as defined under Rule 33 of the CGST Act. They do not retain any part of the stipend and merely facilitate its transfer from the industry partner to the trainees. The jurisdictional officer concurs, noting that YAS is merely a conduit, and the actual service is provided by the trainees to the industry partners.

The ruling concludes that the reimbursement of the stipend by the industry partner to YAS does not attract GST because YAS is acting as an intermediary, and the entire amount received as stipend is paid to the trainees without any deductions.

2. Reimbursement of Insurance Premium:
The applicant initially sought a ruling on whether the reimbursement of the insurance premium paid by YAS attracts GST. However, this question was withdrawn by the applicant during the proceedings. Therefore, no ruling was provided on this issue.

3. Reimbursement of Expenses for Uniform and Safety Shoes:
Similarly, the applicant also withdrew the question regarding the reimbursement of expenses for uniforms and safety shoes. Consequently, no ruling was issued for this question either.

Conclusion:
The ruling specifically addresses the first issue, determining that the reimbursement by the industry partner to YAS of the stipend paid to students does not attract GST. The other two issues were not addressed as the applicant withdrew these questions during the proceedings.