In re Ethnus Consultancy Services Private Limited (GST AAR Karnataka)
The Karnataka Authority for Advance Ruling (AAR) has determined that Ethnus Consultancy Services Private Limited’s training services provided to the Karnataka Skill Development Corporation (KSDC) are subject to Goods and Services Tax (GST). Ethnus Consultancy, a company focused on training and skill development, had sought an advance ruling on whether their services to government bodies, specifically KSDC, were exempt from GST under Notification 12/2017-Central Tax (Rate). This notification provides an exemption for services supplied to the Central or State Government under a training program where the total expenditure is borne by the government. The company argued that since KSDC is a government entity and the training program is government-funded, the services should be considered Nil-rated.
However, the AAR ruled against this claim, stating that the primary condition for the exemption was not met. The AAR’s analysis focused on the fact that the services were provided to KSDC, which is an independent legal entity separate from the State Government itself. The exemption under Notification 12/2017 is specifically for services rendered directly to the Central Government, State Government, or a Union Territory administration. Since KSDC is a distinct legal body, the AAR concluded that the services were not supplied to the State Government as required by the notification. Consequently, the AAR held that the income earned by Ethnus Consultancy from the “Kalike Jothege Kaushalya” program under the CMKKY scheme of the Karnataka government constitutes a taxable supply of services, and the exemption does not apply.
