GST Applicable on Stipend reimbursement received by Appellant

The Maharashtra Appellate Authority for Advance Ruling (AAAR Maharashtra) in the matter of M/s Beeup skills Foundation has ruled that GST will be Applicable on Stipend reimbursement received by Appellant.

The Appellant was originally incorporated as M/s CLR Skills Training Foundation and filed application for ruling under same name. This name was changed on 25.06.2021 to M/s Firstbridge Skill Foundation, which was again changed on 27.07.2021 to its present name viz. M/s Beep Skills Foundation, which further changed on 8.10.2021 to M/s Beeup Skills Foundation.

The appellant submitted that in the contract letter issued to the NEEM Trainee, name of the NEEM Trainer i.e., the Company in which NEEM Trainee shall be placed for training. Therefore, as per appellant, NEEM Trainee is always aware of the NEEM Trainer under which he will be placed for training. He further explained that the NEEM Trainee is aware that he shall be governed by the rules and regulations as may be prescribed by the NEEM Trainer where he will be placed for training.

The appellant pointed out that as per the agreement entered between the NEEM Facilitator and NEEM Trainer, it is clearly mentioned that the liability to pay stipend to the NEEM Trainee is that of the NEEM Trainer. Appellant further observes that as per agreement, it is further agreed in the agreement that the stipend payable to the NEEM Trainee would be equivalent to the prescribed by the Government.

The appellant thus argued that there is absolute clarity between the NEEM Facilitator, NEEM Trainee and NEEM Trainer that the stipend amount would be equivalent to the Minimum wages prescribed by the Government. He therefore stressed that NEEM Facilitator would never be in position of adding any mark-up to the stipend payable to the NEEM Trainee as it is pegged with the Minimum wages prescribed by the Government and hence, the question of NEEM Facilitator adding any mark-up to the stipend amount does not arise.

It was submitted that provisions pertaining to “pure agent” under GST are in pari materia with service tax and therefore, he contended that the above case law applies squarely to the present case.

In view of the above, it was submitted that, as a NEEM Facilitator, the appellant is satisfying all the conditions of a “pure agent” and therefore, he is not liable to GST on the reimbursement of the stipend amount received from NEEM Trainer.

ORDER

The order No. GST-ARA-122/2019-20/B-54 dated 27.04.2022 passed by the Maharashtra Authority for Advance Ruling is upheld with some modification. It is held that the reimbursement amount received by the Appellant from NEEM Trainer towards “Stipend and other expenses incurred by the Applicant in accordance with AICTE (NEEM) Regulations to ensure wealth, safety and health of NEEM Trainees” is not in the capacity of pure agent. In the result the appeal filed by the M/S Beeup Skills Foundation (erstwhile M/s Beep Skills Foundation or M/s CLR Skills Training Foundation) against impugned MAH-AAR order is rejected.

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