NEEM facilitator stipend distributions to trainees not taxable under GST when acting as pure agent

AAR Maharashtra held that stipend amounts received by a NEEM facilitator from Industry Partners for distribution to trainees are not taxable under GST. The applicant acted as pure agent, collecting stipends from Industry Partners and disbursing them in full to trainees without retention. Since the applicant merely served as intermediary without adding value or retaining amounts, these reimbursements do not attract GST and need not be included in taxable value. The ruling followed precedent from Yashaswi Academy case with similar facts.

---

---

Issues Involved:
1. Applicability of GST on the reimbursement received by the applicant from the industry partner for the stipend paid to students.

Issue-wise Detailed Analysis:

1. Applicability of GST on the Reimbursement of Stipend:

Facts and Contentions by the Applicant:
- The applicant, a NEEM facilitator, is registered under the Indian Trust Act, 1882, and the Income-tax Act, 1961, as a not-for-profit organization. It is also registered under the GST Act.
- The NEEM scheme aims to enhance the employability of graduates/diploma holders by providing on-the-job practical training through industry partners.
- The applicant enters into agreements with industry partners to provide trainees for practical training, during which the trainees receive a monthly stipend.
- The applicant processes and disburses the stipend to trainees on behalf of the industry partners and receives reimbursement for the same.
- The applicant contends that it acts as a "Pure Agent" under Rule 33 of the CGST Rules, 2017, and thus the stipend reimbursement should be excluded from the value of supply and not attract GST.

Applicant's Interpretation of Law:
- Section 9 of the CGST Act, 2017, levies GST on the value determined under Section 15 of the CGST Act.
- The applicant argues that it fulfills the conditions of a "Pure Agent" as per Rule 33, which includes:
- Entering into a contractual agreement to act as an agent.
- Not holding any title to the goods or services procured.
- Not using the goods or services for its own interest.
- Receiving only the actual amount incurred without any profit.
- The applicant cites similar rulings in the cases of Yashaswi Academy for Skills and Cadmaxx Solutions Education Trust, where it was held that such reimbursements do not attract GST.

Contentions by the Concerned Officer:
- The officer agrees that the applicant fulfills the conditions of a "Pure Agent" under Rule 33.
- The officer notes that the applicant acts as an intermediary, collecting and disbursing the stipend without any profit.
- The officer concludes that the stipend reimbursement should be excluded from the value of supply and not attract GST.

Observations and Findings:
- The applicant is a NEEM facilitator responsible for enrolling trainees and providing them with practical training through industry partners.
- The applicant charges an administrative fee for its services, which is subject to GST.
- The stipend paid to trainees by the industry partners is routed through the applicant, who disburses it in full without any deductions.
- The applicant acts as a conduit for the stipend payment, and the actual service is provided by the trainees to the industry partners.
- The reimbursement of the stipend does not form part of the taxable value of supply and does not attract GST.

Order:
- The reimbursement received by the applicant from the industry partner for the stipend paid to students does not attract GST.

Conclusion:
- The Authority for Advance Ruling (AAR) ruled that the reimbursement of the stipend paid to trainees by the industry partners through the applicant does not attract GST, as the applicant acts as a "Pure Agent" and the stipend amount is excluded from the value of supply.

---