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TMI Blog2022 (6) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... to enroll NEEM trainees ( trainees ) and provide them with on job practical training through the said Industry Partners. Applicant selects trainees for imparting practical training to them to coordinate between the trainees and the said Industry Partners for the proper implementation of scheme of training envisaged under the Apprentice Act 1961 and for such purpose, enters into a written agreement with the Industry Partners, for identifying and providing relevant eligible trainees to the Industry Partners, for which a fixed administrative fee per trainee per month will be charged from such Industry Partners and on which the applicant accepts that GST is payable. Regarding the issue in respect of stipend paid to the trainees by the applicant, it has been submitted by the applicant that the concerned Industry Partners will 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 will be provided by the trainees to the Industry Partners, for which stipend is mandated to be paid to the trainees by the Industry Partners, this stipend is not directly paid to the trainees by the said In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject case. GST is not leviable in the instant case. - GST-ARA-78/2021-22/B-89 - - - Dated:- 27-6-2022 - SHRI. RAJIV MAGOO, AND SHRI. T.R. RAMNANI, MEMBER GST-ARA-78/2021-22/B-89 Mumbai, dt. 27.06.2022 (Under Section 98 of the Central Goods and Service Tax, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. 2COMS FOUNDATION, the applicant, seeking an advance ruling in respect of the following questions. Whether the reimbursement received by 2COMS foundation (applicant by industry partner, for the stipend paid to students, attract GST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to respective Trainees, will be paid by the Industry Partner to the Applicant thereafter Applicant to pay the stipend amount on actual basis to the respective Trainees. Minimum stipend payable by industry to trainee is fixed by the Government considering nature of work and educational qualification of trainee. 2.6 The Role of the applicant is : (a) Preparation of monthly attendance record of the trainees and getting it certified from the Company; (b) Processing Stipend of the trainees (c) Payment of stipend to the trainees in their individual bank accounts after getting it reimbursed from the Industry Partner. For carrying out these functions, Applicant shall get fixed administrative fees per candidate from the Industry partner. The applicant issues invoices specifying separately: (A): The administrative charges and; (B): The amount for reimbursements of Actual expenses incurred on behalf of industry partner towards: (i) Stipend paid to the trainees. Thus, the Invoice primarily to comprise the details of Administrative Charges (leviable to GST) and Reimbursement Amount. 2.7 Applicant seeks Advance Ruling on applicability of GST on Re-imbu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant for providing services of processing of Stipend amounts. This amount presently is Rs. 200 per Trainee which is much lower to the average Stipend payable to the Trainees which averagely approximates Rs. 10000 per month per Trainee. 2.10 Since applicant is a Pure Agent for Stipend reimbursement, they are also of the opinion that they satisfy conditions of Rule 33 for exclusion of the expenditure / costs being reimbursed from the value of Supply. Pointwise tabular remarks of the applicant are as under: Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,- Applicant Remarks (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; Any Stipend paid to Student/Trainee is made by the Applicant on the Instruction of industry Partner. It is noteworthy that Student/Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ataka Advance Ruling Authority vide Order No.- KAR ADRG 85/2019 dated September 25th 2019 . The extract of the Ruling is being reproduced hereunder: Quote 7. In view of the foregoing, we rule as follows RULING 1. The reimbursement of the stipend paid to the trainees does not attract tax under the GST Acts unquote Applicant states that the service affairs of Cadmaxx Solutions Education Trust is also very similar to the affairs of the Applicant. 2.13 In view of the Applicant s Interpretation of Law read with Rule 33 of CGST Rules, 2017, Maharashtra AAR s decision in case of Yashaswi Academy for Skills and Karnataka AAR s decision in the case of Cadmaxx Solutions Education Trust , the applicant is of the following opinion: SI.No. Invoice Details Applicant Interpretation 1 Administrative Charges for the Services Rendered towards processing of various documents Subject to Levy of GST @ 18% (Applicant is not before Authority for this portion of Proposed Invoicing) 2 Reimb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pure Agent of Industry Partner by paying the stipend and receiving the stipend by mode of reimbursement by an exact amount without keeping any load or gap or profit on the same. In present case, there is contractual obligation on the applicant to pay the stipend as is received from the trainer institute. Hence this first condition is satisfied. 3.4 The second condition of Rule 33 states that, payments made by the pure agent on behalf of the recipient of supply are separately indicated in the invoice issued by the pure agent to the recipient of service. In the instant case, invoices submitted by the applicant reveals that the supplier (viz. the Applicant) shows the reimbursement of stipend and administrative charges separately in its invoices to the Industry Partner. Thus, the second condition is also fulfilled. 3.5 The third condition of Rule 33 states that, the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. In the instant case, the Applicant is enrolled as Facilitator under National Employability Enhancement Mission (NEEM) under which it provides Trainees t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtners and reimburses the trainees. Although the word pure agent has not been explicitly mentioned in the agreements but in reality the applicant is acting as a conduit for the payment where the main supply of service is between industrial partners and trainees. Thus, the relationship between provider of service and recipient of service is on principal to principal basis as far as selection, supply and management of trainees is concerned but the relationship between them in respect of other ancillary services (reimbursement of stipend) is that of pure agent. 3.7.2 A pure agent also : (b) Neither intends to hold nor holds any title to the goods or services or both, so procured or provided as pure agent of the recipient of supply . As per the agreements, the applicant only acts as an intermediary for collecting and paying stipend to the trainees on behalf of the industrial partners. In no way, applicant appears to have been benefitted from it. Accordingly, it may be concluded that the applicant neither intends not holds any title to the services provided to the on-site industrial partners. 3.7.3 Further, a Pure Agent (c) Does not use for his own interest, such good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to stipend paid to trainees on behalf of industrial partners. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 31.05.2022. The Authorized representative of the applicant, Smt. Aditya Maheshwari, Learned CA, Shri. Avijeet Ghoshal learned CA Shri. Prashant Pachisia Learned Trustee were present. The Jurisdictional officer Shri. Mukesh Rathod, Deputy Commissioner, Nagpur was also present. 4.2 The Application was admitted and final e hearing was held on 17.06.2022. The Authorized representative of the applicant, Smt. Aditya Maheshwari, Learned CA, along with the other representatives were present. The Jurisdictional officer was also present. The Authorised Representative reiterated their submissions in support of their contention and the jurisdictional officer also made submissions. 05. OBSERVATIONS AND FINDINGS: 5.1 We have gone through the facts of the case, documents on record, oral and written submissions made by the applicant and the jurisdictional officer. 5.2 The Question raised by the applicant is Whether the reimbursement received by 2COMS foundation (applicant) by industry partner, for the stipend paid to students, attract GST? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under NEEM Regulations like Preparation and submission of monthly invoice relating to payment of stipend to the trainees wherein the Invoice is to specifically and separately mention the stipend amount. 5.8 The applicant has submitted that the stipend cost will be recovered from the Industry partners and the entire amount so recovered will be paid to the trainees without any reception from the said amount of stipend, and therefore the stipend paid should be excluded from value of supply and hence the applicant will not be liable to discharge any GST in the stipend amount received for payment to the trainees. The applicant has cited some case laws in support of their contention and has stated that the stipend amount received by them for onward payment is not attributable for services provided by the applicant. 5.9 We find that the applicant, as a NEEM facilitator, is to identify and provide/enrol trainees to the Industry Partners for which they would charge and receive a fixed administrative fee per trainee per month on which they would also discharge GST. The applicant, in lieu of agreements with the industry partners, prepare monthly attendance record of the trainees, proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for 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 they entered into agreements with various companies/ organizations (called as industry partners) to impart actual practical training to the students. In the said cases also, the applicants, 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. 5.11.3 Since the matters in the Yashaswi Academy case as well as the Patle Eduskills Foundation case decided by this authority are very similar to the facts of the subject case, we have no reason to deviate from our ruling given in the said cases, which are also applicable in the subject case. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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