In re Yashaswi Skills Limited (GST AAR Maharashtra)
The Maharashtra Authority for Advance Ruling (AAR) addressed the GST implications of stipend reimbursements in the case of In re Yashaswi Skills Limited. The applicant, a skill development company, sought clarification on whether reimbursements from industry partners for stipends paid to trainees would attract GST. The AAR focused on whether the applicant acted as a “pure agent” under GST laws, particularly Rule 33 of the CGST Rules, 2017. The core issue centered on the nature of the financial transactions between the skill development company, the industry partners, and the trainees.
The applicant facilitates on-the-job training for students, coordinating with universities and industry partners. They collect stipend payments from the industry partners and then disburse them to the trainees. The applicant argued that they acted as a pure agent, merely passing on the stipend without adding any value or retaining any portion. This argument was supported by the fact that the stipend amounts were separately invoiced and the full amount received was paid to the trainees. The AAR examined the agreements between the applicant and the industry partners, noting that the industry partners were obligated to pay the stipend and that the applicant’s role was primarily administrative.
The jurisdictional officer contested this, arguing that the applicant did not meet the criteria for a pure agent. They pointed to the fact that the applicant invoiced the industry partners for the stipends, suggesting a direct service provision rather than a mere reimbursement. The officer also cited a conflicting ruling from the Karnataka AAR in M/s Team lease Education Foundation, which held that stipend reimbursements were subject to GST. However, the Maharashtra AAR distinguished this case, noting that the Karnataka ruling was based on specific regulations under the National Employability Enhancement Mission (NEEM), which did not apply to the current case.
The Maharashtra AAR concluded that Yashaswi Skills Limited acted as a pure agent in the stipend disbursement process. They determined that the applicant met all the conditions of Rule 33, including acting on the recipient’s authorization, separately indicating the payment in invoices, and not using the funds for their own interest. The ruling emphasized that the applicant merely acted as a conduit for the stipend payments, with the actual service being provided by the trainees to the industry partners. Therefore, the reimbursement of the stipend amount was deemed not to attract GST. The AAR also noted the University Grants Commission’s (UGC) recommendations, which encourage paid internships, further supporting the industry partners’ obligation to pay stipends.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
