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2022 (3) TMI 1088 - AAR - GSTLevy of GST - Pure Agent - reimbursement received towards stipend paid to Trainees on behalf of Industry partner as part of training agreement - reimbursement received against cost of employee compensation insurance obtained for the benefit of Trainees by the Applicant and reimbursed by the Industry partner as per the training agreement - Pure agent services or not - whether TLEF is pure agent of Industry Partner with respect to Stipend and Insurance? Stipend - HELD THAT - TLEF is authorized by Industry partner to make payment of stipend to Trainee (Third party) and TLEF is reimbursed the amount by recipient. This amount is separately indicated in invoice. It is deemed that the work performed by the Trainees in the Industry during their training period to be services procured by TLEF from the Trainees (third party), thereby satisfying Rule 33(iii) CGST Rules - the three conditions of Pure Agent laid down vide Rule 33 CGST Rules and the expression of Pure agent as per Explanation to said Rule has been satisfied by TLEF with respect to stipend reimbursement and TLEF submits that it receives only the actual amount incurred to pay stipend amount to the Trainees, in addition to the amount it receives for supplies provided on its own account. Insurance - HELD THAT - The said single Insurance policy was taken by TLEF for both the trainees as well as its employees. Further, we note that said ICICI Tax invoice dated 1-8-21 of ₹ 191309.86/- is total Insurance premium amount charged by Insurance company on TLEF for both trainees and its (TLEF) employees. TLEF is unable to co-relate the actual Insurance premium amount paid by it to the Insurance company exclusively for the trainees only, vis-a-vis the amount charged by it, as reimbursement, on Industry Partner. TLEF has failed to satisfy that it is pure agent, by not substantiating on record that it receives only the actual amount from Industry Partner for insurance charges incurred by it exclusively for Trainees - The facts of present case is that TLEF is unable to substantiate that the insurance amount it has charged on Industry Recipient in its Invoices was the actual reimbursement of Insurance charges, exclusively, incurred for trainees - TLEF is not pure agent of Industry partner for Insurance premium amount, as TLEF does not satisfy clause (d) to the explanation of Rule 33 CGST Rules. Thereby, insurance amount reflected its invoices, shall not be deducted from arriving at taxable value and thereby leviable to GST.
Issues Involved:
1. Whether the Applicant is acting as a pure agent of the Industry partner regarding the reimbursement received towards the stipend paid to Trainees. 2. Whether the Applicant is acting as a pure agent of the Industry partner regarding the reimbursement received against the cost of employee compensation insurance obtained for the benefit of Trainees. Detailed Analysis: Issue 1: Pure Agent Status for Stipend Reimbursement Findings: - The Applicant, M/s. Team Lease Education Foundation (TLEF), is an approved NEEM Facilitator under the NEEM Regulations, 2017. - TLEF partners with various industry partners to provide practical training to NEEM trainees. - The industry partners are responsible for paying a monthly stipend to the trainees through TLEF. - TLEF raises invoices for the stipend payable to the trainees and includes applicable taxes. - TLEF contends that it acts as a pure agent of the industry partner for the stipend payments and thus, the reimbursement should not be included in the taxable value under GST. Legal Provisions: - Section 9(1) of the GGST Act prescribes the levy of GST on the value determined under Section 15. - Rule 33 of the CGST Rules, 2017, stipulates the conditions under which a supplier can act as a pure agent. - The conditions include acting on authorization, separate indication of payments in invoices, and the procurement of supplies in addition to services provided on the supplier's own account. Judgment: - TLEF is authorized by the industry partner to make stipend payments to trainees and is reimbursed by the industry partner. - The amount is separately indicated in the invoice. - The work performed by the trainees is considered services procured by TLEF from the trainees. - TLEF satisfies the conditions of Rule 33 for acting as a pure agent concerning stipend payments. - Therefore, the reimbursement of the stipend is not chargeable to GST. Ruling: - TLEF is a pure agent of the industry partner for the reimbursement of the actual stipend amount incurred, and such reimbursement is not subject to GST. Issue 2: Pure Agent Status for Insurance Reimbursement Findings: - TLEF obtains medical and accident insurance for the benefit of trainees and is reimbursed by the industry partner. - TLEF submitted documents showing a single insurance policy covering both trainees and its employees. - The insurance premium amount charged by the insurance company was for both trainees and TLEF's employees. - TLEF failed to co-relate the actual insurance premium amount paid exclusively for trainees with the amount charged to the industry partner. Legal Provisions: - Rule 33 of the CGST Rules, 2017, requires that the supplier acts as a pure agent only if the actual amount incurred is reimbursed. - Clause (d) of the explanation to Rule 33 specifies that the supplier must receive only the actual amount incurred for the procurement of goods or services. Judgment: - TLEF did not substantiate that the insurance amount charged to the industry partner was the actual reimbursement for trainees only. - The conditions of Rule 33, particularly clause (d), were not satisfied. - Cited cases (Yashaswi Academy and Cadmaxx Solution) were based on actual reimbursement, which was not substantiated in TLEF's case. Ruling: - TLEF is not a pure agent of the industry partner for the insurance premium amount. - The insurance amount reflected in TLEF's invoices shall not be deducted from the taxable value and is subject to GST. Conclusion: 1. TLEF is a pure agent for the reimbursement of the stipend paid to trainees, and such reimbursement is not chargeable to GST. 2. TLEF is not a pure agent for the reimbursement of the insurance premium amount, and such reimbursement is chargeable to GST.
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