NSDC Training Partner Eligible for GST Exemption Under Entry No. 69 of Notification No. 12/2017-CT(Rate)

The AAR, Karnataka held that the applicant, as an approved NSDC training partner providing services under the Market led Fee-based Services Scheme, is eligible for exemption under entry No. 69 of Notification No. 12/2017-Central Tax (Rate). Although students receive the services, the partner universities collect and remit the payment to the applicant. Therefore, the consideration received by the applicant qualifies for exemption under the relevant GST provisions.

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ISSUES:

Whether the applicant is eligible for exemption under entry no. 69 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, on services provided to students under the "Market led Fee-based Services Scheme" implemented by the National Skill Development Corporation (NSDC).Whether services provided by the applicant at Partner Universities' campuses qualify for exemption under the said notification, particularly where fee collection and payment mechanisms involve the universities.The applicability and interpretation of "in relation to" a scheme implemented by NSDC for the purpose of GST exemption under entry no. 69.The effect of Rule 33 of CGST Rules, 2017 concerning the role of universities as "pure agents" or authorized payers in the fee collection and payment process.

RULINGS / HOLDINGS:

The applicant is eligible for exemption under entry no. 69 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, as amended, on services provided to students at both Kalvium campus and Partner Universities' campuses in relation to the "Market led Fee-based Services Scheme" implemented by NSDC.The two conditions for exemption under entry no. 69-(a) being an approved training partner of NSDC and (b) providing services "in relation to" a scheme implemented by NSDC-are satisfied by the applicant.Services provided by the applicant at Partner Universities' campuses are exempt even if the universities collect fees from students and pay the applicant, provided the universities act as intermediaries and the students remain the recipients of the service under Section 2(93) of CGST Act.Rule 33 of CGST Rules, 2017 requires that for exemption to apply, universities must act as "pure agents" or be authorized by students to pay fees on their behalf; however, the exemption is not negated if the universities collect and remit fees as intermediaries, since consideration includes amounts paid by any person on behalf of the recipient under Section 2(31) of CGST Act.

RATIONALE:

The Court applied the provisions of the CGST Act, 2017 and KGST Act, 2017, which are in pari materia, particularly focusing on Section 2(31) (definition of consideration), Section 2(93) (definition of recipient of service), and the exemption notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 08/2024-Central Tax (Rate) dated 08.10.2024.The Court interpreted the exemption entry no. 69 to require that the service provider be an "approved training partner" of NSDC and that the services be "in relation to" an NSDC scheme, noting that the phrase "in relation to" has a wide connotation and does not restrict exemption based on the class of service recipients.The Court examined the role of Partner Universities in fee collection and payment, relying on the definition of "consideration" to include payments made by any person on behalf of the recipient, thus allowing exemption where universities act as intermediaries, even if not formally "pure agents" under Rule 33.The Court relied on precedent from Authority for Advance Ruling, Karnataka and Telangana, which supported the interpretation that exemption under entry no. 69 applies broadly to services by approved training partners in relation to NSDC schemes.

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