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TMI Blog2019 (10) TMI 1093X X X X Extracts X X X X X X X X Extracts X X X X ..... ELD 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12/2017) No. FD 48 CSL 2017 dated 29.06.2017. - KAR ADRG 85/2019 - - - Dated:- 25-9-2019 - SRI. HARISH DHARNIA, AND DR. RAVI PRASAD M.P. MEMBER Represented by : Sri Sanjay Kalliguddi, Chartered Accountant ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER 98(4) OF THE KARNATAKA GOODS SERVICES TAX ACT, 2017 1. M/s. Cadmaxx Solutions Education Trust, (called as the Applicant hereinafter), having GSTIN number 29AABTC0127F1Z6, has filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 and Section 97 of the KGST Act, 2017, in FORM GST ARA-01 discharging the fee of ₹ 5,000-00 each under the CGST Act and the KGST Act. 2. The Applicant is a trust and is registered under the Goods and services Act, 2017. The applicant is a 12A registered trust under the Income Tax Act, 1962 and the applicant is seeking advance ruling on the following issues,- a) Under this scheme the resource provided by trust, these called as On Job Trainee . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2 The AICTE has the NEEM (National Employability Enhancement Mission) which aims to improve the employability of the trainees and the applicant is selected to provide this training. The AICTE is not paying any amount but only registers the institutes. The on-job training, which is imparted to the trainees in the mission, is for 3 to 36 months and stipend is paid to the trainees by the companies through the applicant and no consideration is paid to the applicant for the training services imparted by the companies where the trainees are posted for on-job training. There is no employee-employer relationship between the company and the trainee and the stipend is paid for the services obtained from the trainee and the applicant acts as a pure agent for collecting the amount from the company and paying to the trainee. The company also pays Insurance and Workmen compensation premiums which the applicant takes in the name of the trainee to cover the risk for the trainees as there is no ESI coverage for them. In these cases the applicant is the proposer and the beneficiary is the trainee. 4.3 Sometimes, the applicant charges the companies for the aptitude building training provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entered by the applicant with the companies providing on-the-job training shows the following:- (a) The trainees shall under no circumstance be deemed to be the employees of the Company or the applicant. (b) The Company shall be solely responsible for providing adequate facilities in accordance with the NEEM Regulations or as may be deemed appropriate by the applicant for the Training, from time to time. (c) Stipend - In consideration of the dedicated deployment of the Trainees to the Company, the Company shall pay,- (i) a monthly stipend to the applicant to be utilised by the applicant solely for the purposes of paying the trainees in accordance with the NEEM regulations, which shall be equal to or greater than the prescribed minimum wages for unskilled category under applicable law; and (ii) employee compensation insurance premium It is also clarified that the stipend payable shall be a single consolidated amount and shall not be subject to further withholding tax, namely TDS or any other statutory deductions or payments, except for Income Tax, if applicable. (d) The contract specifies that Workmen Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trainee being the beneficiaries. 5. In case the trainees gets selected by the trainer company for regular employment, then there will be a charge called on Rolls absorption fees which the trainer company needs to pay and this is not mandatory in all agreements but only a negotiated one. 5.8 On the whole, the applicant is collecting three types of amounts - (a) stipend to be paid to the applicant (b) the reimbursement of the insurance and compensation premiums (c) The sourcing fee and on Rolls absorption fees 6. Entry No. 1 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 exempts the CGST on the Services by an entity registered under section 12AA of the Income Tax Act, 1961 by way of charitable activities. The applicant has produced a copy of the Order in support of the fact that he is registered under section 12AA of the Income Tax Act and hence charitable services supplied by the applicant are exempted. 6.1 The term charitable activities is defined in clause (r) of paragraph 2 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 which reads as under: ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 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. 6.5 Regarding the third issue of payment of Group Insurance and Workmen compensation scheme is made by the applicant with the trainee being beneficiary. 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. 6.6 Regarding the fourth question, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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