No GST Applicable on Stipend Paid to the Trainees: AAR
This Applicant, Ws Patle EduSkills Foundation, registered under the GST Lows is engaged in the business of Human Resource & Skill Development and is a facilitator under the National Employability Enhancement Mission (‘NEEM Scheme’) of the Govt. of India. The primary objective of the NEEM Scheme, is to generate skilled labor by facilitating “on-job practical training” to trainees to enhance their employability. As per the NEEM Regulations, facilitators are required to partner with various trainers such as Employers/companies/Industries for the completion of training of trainees. The Applicant is registered as a facilitator.
The applicant selects trainees for imparting practical training to the trainees under the Apprentice Act 1961 and for such purpose, enters into a written agreement with the Entities/Trainer Institutes and the applicant, charges a fixed fee of Rs. 1500 per trainee per month from such Entities/Trainer Institutes on which GST is discharged by the Applicant.
The question raised by the applicant is “Whether the Applicant, in the capacity of being a NEEM facilitator, acts as a ‘Pure Agent’ while receiving reimbursement of stipend amounts from the various Trainer Institutes and remitting the same to the trainees?
It was held that the first question does not pertain to any of the matters specified in clauses (a) to (g) of Section 97 (2) of the CGST Act, 2017 so no decision was given for the same.
With respect to the payment of Stipend to the Trainees, as per the agreement, a monthly stipend shall be paid to the trainees by Trainer Institute by way of issuing a cheque in the name of the Applicant who is required to make such payment to the trainees. The Applicant submits that he is to act as a “Pure Agent” of the Trainer Institute under Rule 33 of the CGST Act. Further, as per the Agreements, the applicant has to Discharge all other functions and duties as are mandated to be performed as a facilitator under NEEM Regulations like Preparation and submission of the monthly invoice relating to the payment of stipend to the trainees wherein the Invoice is to specifically and separately mention the stipend amount. In a similar case of M’s Yashaswi Academy for skills, it was 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 facts are similar to the facts of the subject case, the court had no reason to deviate from our ruling given in the said case which is also applicable in the subject case. It was decided that the stipend amount does not form a part of the taxable value.
To Read Judgment Click on The PDF given below.