AAR Maharashtra rules pure agent service questions outside advance ruling scope under Section 97(2) CGST Act 2017

AAR Maharashtra ruled that questions regarding pure agent service do not fall within the scope of advance ruling applications under Section 97(2) of CGST Act, 2017, and therefore cannot be answered. However, regarding valuation, the Authority held that stipend amounts received by the applicant acting as NEEM facilitator from trainer institutes and remitted to trainees should be included in taxable value. The applicant, despite acting as a declared pure agent in agreements, was required to include stipend reimbursements in their service tax valuation based on precedent from similar NEEM facilitator cases.

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Issues Involved:
1. 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 traineesRs.
2. If not, whether such stipend amount forms a part of the taxable valueRs.

Issue-wise Detailed Analysis:

Issue 1: Pure Agent Status
The applicant, M/s Patle Eduskills Foundation, sought an advance ruling on whether it acts as a 'Pure Agent' while receiving reimbursement of stipend amounts from various Trainer Institutes and remitting the same to the trainees. The applicant argued that it qualifies as a 'Pure Agent' under Rule 33 of the CGST Act, 2017, as it merely facilitates the payment of stipends without any retention or profit element. The applicant cited several advance rulings, including DRS Marine Services Pvt. Ltd., Arivu Educational Consultants Pvt Ltd., Asiatic Clinical Research Pvt Ltd., and Cadmaxx Solutions Education Trust, to support its contention.

The concerned officer agreed with the applicant, stating that the applicant satisfies all conditions stipulated in Rule 33 of the CGST Act, 2017, for being a 'Pure Agent.' The officer noted that the applicant's invoices separately mention the reimbursement of stipend and service charges, fulfilling the conditions of Rule 33.

Judgment on Issue 1:
The Authority for Advance Ruling (AAR) refrained from answering whether the applicant acts as a 'Pure Agent' while receiving reimbursement of stipend amounts. The AAR observed that the question does not pertain to any of the matters specified in clauses (a) to (g) of Section 97(2) of the CGST Act, 2017.

Issue 2: Taxable Value of Stipend Amount
The applicant argued that the stipend amount received from Trainer Institutes and paid to trainees does not form part of the taxable value as it is a pass-through payment. The applicant cited various case laws and referred to Sections 9 and 15 of the CGST Act, 2017, to support its contention that only the service charges (Rs. 1500/- per trainee per month) should be considered for GST.

The concerned officer concurred, stating that the stipend amount should be excluded from the taxable value as per Rule 33 of the CGST Act, 2017. The officer referred to similar rulings in the cases of Cadmaxx Solutions Education Trust and Yashaswi Academy for Skills, where reimbursement of stipend was not considered taxable.

Judgment on Issue 2:
The AAR held that the stipend paid by Trainer Institutes to the applicant, which is then disbursed to the trainees without any retention, does not attract GST. The AAR agreed with the applicant's submission and the jurisdictional officer's observations, concluding that the stipend amount received for onward payment to trainees is not required to be added to the taxable value. The AAR referenced the similar case of Yashaswi Academy for Skills, where it was held that the reimbursement of stipend does not attract tax under the GST Act.

Order:
1. The question of whether the applicant acts as a 'Pure Agent' was not answered.
2. The stipend amount received by the applicant for payment to trainees does not form part of the taxable value.

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