AAR Holds Training Services Provided Through State Skill Development Corporation Are Taxable

The applicant, engaged in training and skill development, filed Form GST ARA-01 on 24.05.2024 under Section 97 of the CGST Act, 2017 and the KGST Act, 2017, along with fees of Rs. 5,000 each under both statutes. The application was represented by the Senior Manager (Finance and Accounts). The applicant submitted that it imparts employability skills, certification, and placement support, and partners with various State Governments through their skill development corporations.

A work order from the Karnataka Skill Development Corporation (KSDC) recognised it as an approved industry partner for training students in government degree colleges. The ruling was sought in relation to services provided under the “Kalike Jothege Kaushalya” program of the CMKKY scheme.

Issue Raised: Whether training services supplied to Karnataka Skill Development Corporation, though funded by the State, qualify for exemption under Entry No. 72 of Notification 12/2017-Central Tax (Rate).

AAR’s Decision: The Authority reviewed Entry No. 72 and found three cumulative requirements, the services have to be rendered to the Central/State Government or Union territory administration; the services have to be in the form of a training programme; and 75% or more of the cost has to be incurred by Government. It observed that the candidate was rendering services to KSDC, which is a separate legal entity and not the State Government. Hence, the first condition was not met.

Since this threshold requirement was not met, the Authority did not examine the other conditions. It ruled that exemption under Entry No. 72 of Notification 12/2017 is not applicable. Thus, the income earned from Karnataka Skill Development Corporation under the “KalikeJothege Kaushalya” programme of the CMKKY scheme is a taxable supply of services.

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