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TMI Blog2022 (6) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to the trainees. The sample agreement submitted mentions that, the Applicant is to act as a Pure Agent of the Trainer Institute. In the case of IN RE: M/S. YASHASWI ACADEMY FOR SKILLS [ 2021 (8) TMI 1017 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] also, the Applicant Company was registered as an Agent under National Employment Enhancement Mission ('NEEM') of the Government of India and acted as a facilitator or extending support for mobilizing the trainees under NEEM Scheme of Government of India as per regulations, under notification issued by All India Council for Technical Education (AICTE), for providing on the job practical training in industries to trainees to enhance their future employability, and for which the applicant entered into agreements with various companies/ organizations (called as industry partners) to impart actual practical training to the students. In the said case also, the applicant in addition to taxable amounts received from its Industry Partners for services rendered, also received Stipends amounts (payable by the Industry Partners to the Trainees) which was paid in full to the trainees - the issue is thus answered in negative. - GS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ') to enhance the prospects of their employability. 2.4 Notification dt 15.06.2017 AICTE, issued 'NEEM Regulations' which makes following provisions:- - The contract executed between the facilitator and the trainee shall not be either an offer of employment or a guarantee of employment; - Trainees shall be given a Completion Certificate at the end of the training period; - Facilitator to pay all enrolled trainees a remuneration/stipend which shall be at par with the prescribed minimum wages for unskilled category; - Remuneration/stipend will be paid as a single consolidated amount and such payment will not attract any statutory deductions or payments applicable to regular employees i.e. PF/ESI etc., since the NEEM contract assures training and does not constitute employment. 2.5 Further, as per the NEEM Regulations, facilitators are required to partner with various trainers such as Employers/Company/ lndustry for completion of training of trainees. Hence, Applicant approached certain institutes in education healthcare sector ('Trainer Institutes') where on-job practical training can be provided to eligible trainees. For this purpose, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the trainees; The Applicant to act as a Pure Agent between the Trainer Institute and the trainees; Trainer Institute to bear actual cost of Insurance Premium payable for the said trainees. - Obligation of the Applicant : Prepare submit monthly invoice to College relating to payment of stipend to the trainees ; Invoice to specifically separately mention the stipend amount and to state that the amount is being collected as Pure Agent under Rule 33 of the CGST Act ; Make timely payment of stipend to trainees after receiving a cheque from the college; Discharge all other functions, duties as are mandated to be performed by the Applicant as a facilitator under NEEM Regulations. - Employee-Employer Relationship: Selection of trainees under Contract does not constitute an Employment Contract either with the Applicant or with the Trainer Institute which also has no obligation to offer employment to the trainees on successful completion of period of training. - Costing: Monthly stipend shall be as per applicable minimum wages additional special allowance, if applicable; Trainer Institute to pay Rs. 1500/- per trainee per month as service charges to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any amount charged for anything done by the supplier in respect of the supply. The only consideration which is received and retained by the Applicant are the service charges viz. Rs. 1500/- per trainee per month which is against facilitation sourcing of trainees for the concerned Institutes. Therefore, only such service charges can be said to be the price paid for the services provided by Applicant. 2.13 From a reading of clause 4 of the Agreement between applicant the Trainer Institute, the legal liability to pay stipend to trainees is cast on the Trainer Institute the Applicant only acts as the medium of payment/ remittance of stipend to the trainees. Accordingly, such stipend amount would not fall within sub-section 2(b) of Section 15 of the CGST Act hence should not be included in the taxable value. Furthermore, the stipend is also not an 'incidental expense' or any 'charge' collected by applicant for the services provided by it and would not fall within sub-section 2(c) of Section 15 of the CGST Act and hence should not be included in the taxable value. 2.14 Thus, the stipend amounts are not related to the service provided by the Applicant in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (viz. the Applicant) shows separately the reimbursement of stipend and service charge. Thus, the second condition is fulfilled. (iii) The method of paying stipend is fixed in a manner where the Trainer institutes pay the stipend amount to the Applicant who in turn without deducting any amount disburses it to the trainees. Here the services provided by the Third Party (i.e. Trainee) to the recipient (i.e. Training Institutes) is in the nature of work but there is no Employee-Employer Relationship between them. This is in addition to the services supplied by the Applicant on its own account i.e. identification, supply and management of trainees. Thus, the third conditions is satisfied. 3.2 As per the submissions made by the applicant, various trainer institutes and the applicant have entered into contractual agreements, the terms and conditions of all such agreements are similar. From the terms and conditions of agreements, it is observed that the role of the applicant is facilitator who besides providing trainees to these institutes collects stipend from the institutes and reimburses the trainees. Thus, the relationship between provider of service and recipient of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded from the value of supply, if all the following conditions are satisfied. The applicant is merely acting as a pure agent so far as collection and the payment of stipend to the trainees is concerned. In this regard issue of applying GST on stipend is confirmed in case of M/s Cadmaxx Solution education Trust (GST AAR Karnataka) Advance Ruling No-KAR-ADRG-85/2009 Dtd 25.09.2019. Same facts are confirmed By Maharashtra authority of Advance ruling in identical ARA Application No-83 dtd 26.1.2.2019 M/s Yashaswi Academy for Skills. Thus, the applicant's recovery of such expenses is disbursement and hence does not form a part of value of supply in accordance with rule 33 and hence is excluded from the taxable value of supply. 04. HEARING 4.1 Preliminary hearing was held on 21.09.2022. Authorized representative of the Applicant, Shri. Varun Vijaywargi, C.A. was present. Jurisdictional officer Shri. Mukesh Rathod (Deputy Commissioner Nagpur-VAT-E003) was also present. The Authorized representative made oral submission with respect to admission of the application. 4.2 The application was admitted and called for final e-hearing on 04.05.2022. The Authorized representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible trainees to the Trainer Institutes, charges a fixed fee of Rs. 1500/- per trainee per month from such Entities/Trainer Institutes on which GST is discharged by the Applicant. 5.6 The first question raised by the applicant is Whether the Applicant, in the capacity of being a NEEM facilitator, acts as a 'Pure Agent' while receiving reimbursement of stipend amounts from the various Trainer Institutes and remitting the same to the trainees? 5.6.1 In the case of this Authority, Advance ruling means a decision provided by the Authority to an applicant on matters or on questions specified in sub-section (2) of section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the appellant. 5.2 The Questions covered under Section 97 (2) of the CGST Act, 2017 are as under:- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutes for which they charge a fixed fee of Rs. 1500/- per trainee per month on which they also discharges tax. The entire process is done under a written agreement between the Entities/Trainer Institutes and the applicant. The applicant, in lieu of agreements with the industry partners, prepares monthly attendance record of the trainees, processes stipends of the trainees, makes payment of stipend to the apprentices and discharges all functions duties as mandated to be performed as a facilitator under NEEM Regulations including preparation and submission of monthly invoice relating to payment of stipend. 5.12 Regarding the issue in respect of stipend paid to the trainees by the applicant, it has been submitted by the applicant that Entities/Training Institutes mentioned provide training to the trainees and are required to pay stipend to the trainees as per the NEEM Regulations. Even though, it is seen that the services are provided by the trainees to the Entities/Training Institutes, for which stipend is mandated to be paid to the trainees by the Entities/Training Institutes, this stipend is not directly paid to the trainees by the said Entities/Training Institutes but is r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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