In re 2Coms Foundation (GST AAR Maharashtra)
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, processes stipends of the trainees, makes payment of stipend to the trainees and discharge 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.
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 Industry Partners but will be routed through the applicant as per the NEEM Regulations. The entire amounts received as stipend from the Industry Partners will be paid to the trainees without any amount being retained. Thus, the applicant is only acting as an intermediary in collecting the stipend from the Industry Partners and then disbursing the same to the trainees in full without making any deductions from the stipend before disbursement to the trainees. The applicant is only a conduit for the payment of stipend and the actual service is supplied by the trainees to the Industry Partners against which stipend is payable. The amount of stipend received by the applicant from the Industry Partners and paid in full to the trainees is not taxable at the hands of the applicant. Hence, in view of the submissions made by the applicant and also in agreement with the observations made by the jurisdictional officer, it is held that the stipend paid by the Industry Partners to the applicant to be further paid to the trainees in full does not attract GST and is not required to be added to the taxable value.
In a similar case of M/s Yashaswi Academy for Skills as well as M/s Patle Eduskills Foundation, this Authority has held that the reimbursement by Industry Partner to the applicant, of the stipend paid to the trainees, does not attract tax under the GST Act.
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.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
PROCEEDINGS
(under section 98 of the Central Goods and Services Tax Act, 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. Leoni Cable Solutions (India) Private Limited, 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 this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT FACTS:
2.1 2COMS Foundation, (the applicant/NEEM Facilitator) is registered as Trust under the Indian Trust Act, 1882 & also registered under sec. 12AA of Income-tax Act, 1961 as not for profit organization with GSTIN: 27AAATZ2088B1ZG. Applicant Trust is also registered as Agent under National Employability Enhancement Mission (hereinafter for the sake of brevity referred as ‘NEEM’) as a NEEM Facilitator under NEEM ID : 1-4241562511.
2.2 NEEM is a Central Government initiative for enhancing the employability of the graduate/diploma holder in any technical/non-technical stream. To organize the activity methodically, the Central Government has formulated NEEM Regulations. Organizations having expertise in this field are required to get itself registered as NEEM agent (facilitator) with All India Council for Technical Education (AICTE). NEEM Agent’s job is to select trainees and also suitable industry partners.
2.3 The Applicant\NEEM agent as a facilitator would extend support for mobilizing the trainees under NEEM Scheme of Government of India as per NEEM regulations issued under notification issued by All India Council for Technical Education (AICTE) for providing to trainees, on-the-job practical training in industries to enhance their future employability. For that purpose, NEEM agent enters into agreements with various companies/organizations (herein after called as Industry Partner) who impart actual practical training to the students,
2.4 During the duration of the training, the trainees deployed by the applicant to undergo on the job practical training with the Industry Partner for which the trainees would also be paid stipend.
2.5 Applicant to enter into contract with Industry partner for giving Industrial training to students. As per rules of NEEM scheme, the Applicant to choose suitable industry partner (having infrastructure facilities) for onsite job training to selected trainees within the premise of the Industry Partner. As per agreement, industry partner to be under obligation to pay stipend to trainees & applicant to act as agent on behalf of industry partner in processing Stipend of Trainees and disbursing the same to the trainees on behalf of Industry Partner. Monthly stipend, to be paid 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-imbursed amount i.e. Stipend received from Industry Partner to be distributed to the trainees at actuals.
B. STATEMENT CONTAINING APPLICANT’S INTERPRETATION OF LAW
2.8 Section 9 of the CGST Act, 2017 envisages levy of GST on the value determined under Section 15 of the CGST Act & Section 15 of the said Act envisages that such value shall be determined in such manner as may be prescribed.
2.9 The applicant is of the opinion that it acts as Pure Agent as far as payment of Stipend and collection by mode of reimbursement of Stipend is concerned and as a Pure Agent in the subject transaction satisfies all the conditions mentioned in Rule 33 of Chapter IV of CGST Rules, 2017, tabulated as under:-
