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2022 (2) TMI 1100 - AAR - GSTLevy of GST - providing educational related services - employee employer relationship - nature of services provided and that offered by the prospective service recipient are same - Whether the services under consideration will be covered under entry 1 of schedule III of RGST/ CGST Act or not? - HELD THAT - The agreement has been entered into on a principal to principal basis and there is no scene in respect of any employment. Hence, it can be said that there no Service is provided by an employee to the employer in the course of or in relation to any employment in the instant case. Thus, the provisions of entry no. 1 of schedule III of the GST act are not applicable. In the instant case, the applicant intends to provide Educational and Training Services to its service recipient i.e. M/s Mentors Eduserv on the basis of section 13 of the agreement dated 10.02.2020. on gone through the section 13 of the agreement, we find that there is no establishment of term 'employment'. Hence, activity or transaction between service provider i.e. applicant and service receiver i.e. M/s Mentors Eduserv does not constitute employee-employer relation - thus the activity or transaction is not covered under entry no. 1 of the Schedule III of the act and resulted in a 'supply of service' as per Section 7 of the CGST Act, 2017 and tax will be leviable under section 9 of the CGST Act, 2017 and valuation thereof will be done as per section 15 of the CGST Act, 2017. The services under consideration will not be covered under entry 1 of schedule III of RGST/ CGST Act, 2017.
Issues Involved:
1. Determination of the nature of services provided by the applicant. 2. Applicability of GST on the services provided. 3. Classification of the services under the GST Act. Issue-wise Detailed Analysis: 1. Determination of the Nature of Services Provided by the Applicant: The applicant, an individual with a temporary GST user ID, previously provided Educational and Training Services to M/s Mentors Eduserv and classified these services under HSN 999294, taxable at 18% under GST law. The applicant's GST registration was canceled, and they have been advised by Income Tax authorities to treat the receipt of such services as employment. The applicant seeks clarification on whether the new services offered to a prospective recipient should be treated as employment or as a supply of services under GST. The applicant's agreement with M/s Mentors Eduserv specified a principal-to-principal relationship, not an employment relationship. The new offer also contains similar terms and conditions. 2. Applicability of GST on the Services Provided: The applicant wants to determine if the services under consideration fall under entry 1 of Schedule III of the RGST/CGST Act, which excludes services by an employee to the employer from being treated as a supply of goods or services. The relevant legal provisions include Section 7 (Scope of Supply) and Section 9 (Levy and Collection) of the CGST Act, 2017, which outline the conditions under which GST is applicable. According to Section 7(2)(a) of the CGST Act, activities specified in Schedule III, such as services by an employee to the employer in the course of employment, are not considered as supply and thus not subject to GST. The agreement between the applicant and M/s Mentors Eduserv, as well as the new offer, clearly state a principal-to-principal relationship, indicating no employment relationship. 3. Classification of the Services under the GST Act: The agreement dated 10.02.2020 between the applicant and M/s Mentors Eduserv explicitly states that the relationship is on a principal-to-principal basis, and there is no employment relationship. Therefore, the services provided by the applicant do not fall under the exclusion of Schedule III of the GST Act. The ruling concludes that the services provided by the applicant are not covered under entry 1 of Schedule III of the RGST/CGST Act, 2017. Consequently, these services constitute a supply of service under Section 7 of the CGST Act, 2017, and are subject to GST under Section 9, with valuation as per Section 15 of the CGST Act, 2017. Ruling: Question: Whether the services under consideration will be covered under entry 1 of Schedule III of RGST/CGST Act or not? Answer: NO, the services under consideration will not be covered under entry 1 of Schedule III of RGST/CGST Act, 2017.
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