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of <h1>Services to Karnataka Skill Development Corp under 'Kalike Jothege Kaushalya' not exempt under Notification 12/2017-Central Tax</h1> <h3>In Re: M/s. Ethnus Consultancy Services Pvt. Ltd,</h3> The AAR, Karnataka held that services provided to Karnataka Skill Development Corporation (KSDC) under the 'Kalike Jothege Kaushalya' program are not ... Services provided to Government under training programme - applicability of N/N. 12/2017, SL. No. 72, Chapter 99, Heading 9992 reads “Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration” - income earned from Karnataka Skill Development Corporation by implementing skill development program “Kalike Jothege Kaushalya” under the CMKKY scheme of Govt. of Karnataka - taxable supply or not - HELD THAT:- It is observed from the exemption under entry No. 72 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 that to claim exemption under this entry, all of the following three conditions should be satisfied:- a) The services should be provided to the Central Government or State Government or Union territory. b) Services provided should be in the form of training programme and c) 75% or more of the total expenditure is borne by the Central Government or State Government or Union territory. The Applicant is providing services to KSDC, as per the work order provided by the Applicant, which is an independent legal entity distinct from state government. Therefore the Applicant is not providing services to the Central Government or State Government or Union territory. Thus the first condition itself is not satisfied and hence it is not required to go into the validation of remaining conditions. The Applicant is not eligible to claim exemption under the entry number 72 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 and hence the applicant’s services are exigible to GST - The income earned from Karnataka Skill Development Corporation by implementing skill development program “Kalike Jothege Kaushalya” under the CMKKY scheme of Govt. of Karnataka, is a taxable supply of services. ISSUES: Whether exemption under entry No. 72 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 applies to services provided under training programmes funded by Government entities.Whether income earned from implementing a skill development program under a State Government scheme constitutes a taxable supply of services under GST. RULINGS / HOLDINGS: Exemption under entry No. 72 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable where services are provided to an independent legal entity distinct from the Central Government, State Government, or Union territory administration, even if such entity is a government-owned corporation.Income earned from Karnataka Skill Development Corporation by implementing the skill development program 'Kalike Jothege Kaushalya' under the CMKKY scheme of the Government of Karnataka constitutes a taxable supply of services. RATIONALE: The Court applied the conditions stipulated in entry No. 72 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017, which requires that: (a) services be provided to the Central Government, State Government, or Union territory administration; (b) services be in the form of training programmes; and (c) 75% or more of the total expenditure be borne by the Government entity.The Court found that the Applicant provided services to a government-owned corporation (Karnataka Skill Development Corporation), which is an independent legal entity distinct from the State Government, and therefore the first condition was not satisfied.Since the first condition was not met, the Court did not consider the remaining conditions and held that the exemption does not apply.The Court concluded that the services rendered to the government-owned corporation are subject to GST as taxable supply of services under the CGST Act, 2017 and the KGST Act, 2017, which are in pari materia.
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