TaxTMI 
TaxTMI 
2022 (3) TMI 1088
X X X X Extracts X X X X
X X X X Extracts X X X X
....s required to be executed between NEEM Facilitator and the NEEM trainee to capture all terms and conditions (NEEM contract). However, the NEEM contract is neither an offer of employment nor a guarantee of employment. 3. Further, TLEF submits that Trainees are entitled for payment of remuneration/stipend under the NEEM Regulations which shall be at par with the prescribed minimum wages for unskilled category. Such remuneration/stipend shall be paid at as a single consolidated amount without any statutory deductions applicable to regular employee viz. PF/ESI etc. since the NEEM contract assures training and does not constitute employment. 4. TLEF submits that NEEM Facilitators are required to partner with various trainers and Employers/Company/Industry (Industry partner) for imparting training to NEEM trainees. For the said purpose, TLEF has entered into training agreements with various companies (industry partners) for imparting practical training and has registered them as training partner in accordance with NEEM Regulations. Copy of sample agreement with one of the client M/s. L M Wind Power Blades India Pvt. Ltd. (Industry partner) is submitted. The said agreement has been ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urcing fee' as one-time charge towards sourcing of Trainees. c. Reimbursement of monthly 'stipend' paid to Trainees on behalf of Industry partner and in accordance with NEEM Regulations. d. Reimbursement of cost of medical and accident insurance obtained for welfare of Trainees as agreed with the Industry partner. 6.2 TLEF, as agreed upon with the Industry partner, raise invoices for the stipend payable to the Trainees and administration fee on a monthly basis including applicable taxes (relevant invoice copy enclosed as Appendix-2). Further, the said invoice also includes amount of insurance premium as and when charged. 6.3 Currently, TLEF is collecting GST on the entire transaction value which is the price payable by Industry partner in accordance with section15 of the CGST Act which includes administration fee, sourcing fee, enrolment fee and the following reimbursements: a. monthly stipend paid to trainees on behalf of Industry partner. b. cost of medical and accident insurance obtained for benefit of the Trainees and reimbursed by Industry partner. 6.4 TLEF is of the view that the reimbursement received towards stipend and cost of m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterest or late fee or penalty for delayed payment of any consideration for any supply; and subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments; Explanation--For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy 7.2.1.5 The value of the supply shall not include any discount which is given-- 7.2.1.6 before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and 7.2.1.7 after the supply has been effected, if- 7.2.1.7.1 such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and 7.2.17.2 input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. 7.2.2 Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed. 7.2.3 Notwithstanding anything contained in sub-s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....both so procured or supplied as pure agent of the recipient of supply; c) Does not use for his own interest such goods or services so procured; and d) Receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account." 7.6 TLEF submits that any cost or expenditure incurred by supplier on behalf of the recipient of service shall be excluded from the value of supply u/s 15 of the CGST Act if the conditions prescribed under Rule 33 are satisfied. However, in case, any cost or expenditure is incurred by supplier on its own account for provision of supply, then such cost or expenditure shall form part of the value of supply. 7.7 It is submitted that in the present case, in order to determine the taxability of various amounts charged by TLEF from the Industry partner, the relevant terms of the agreement which is provided below are evaluated: Para Reference Particulars as per training agreement Clause 2 SCOPE OF TRAINING Clause 2.1 Subject to the terms of this Agreement, the Company is hereby registered by TeamLease as Training partner in accordance with NEEM Reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nvoice, which includes a receipt of the monthly progress report for time period being invoiced, to the extent required by the company.(refer Annexure B) 7.8 From above, it is clear that TLEF is charging following amounts from the Industry partner: Particulars Nature of Income Remarks Administration fee for assisting the Industry partner with the administrative tasks for deployment of Trainees for the Training Towards services provided by Applicant on its own Sourcing fee one-time charge towards sourcing of Trainees Towards services provided by Applicant on its own Absorption fee Fee towards selection of trainees by industry partner Towards services provided by Applicant on its own Stipend Paid to Trainees on behalf of Industry partner in accordance with NEEM Regulations Payment made on behalf of Industry partner Cost of medical and accident insurance Insurance obtained for the benefit of trainees and reimbursed by Industry partner Payment made on behalf of Industry partner 7.9 From above, TLEF submits that the reimbursement received from Industry partner towards stipend paid to Trainees and the cost of medical and accident....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Training. Sourcing Fee: For candidates sourced by TeamLease, there will be a one-time charge of Rs. 2500 per candidate Absorption cost: For Trainees deployed by TeamLease there will be a charge 8.33% of Annual CTC if a Trainee is selected by the company. Meaning of Pure Agent: a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; Clause 3: As depicted in Sr (i) above (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; The Applicant is only a conduit for the payment and the actual service is provided by the Trainees to the Industry partner and the Industry partner is liable to make the payment of consideration (c) does not use for his own interest such goods or services so procured; and The applicant is providing services as per NEEM regulations. Further, the applicant doesn't retain any portion of the stipend and insurance premium. It is merely acting as an intermediary of the Industry partner (d) receives only the actual amoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly in accordance with Rule 33 of the GGST Act. 7.16 It is submitted by the applicant that the above rationale has also affirmed by the Hon'ble Authority for Advance Ruling, Maharashtra in similar case of M/s. Yashaswi Academy for Skills (2021 (8) TMI 1018) where the Hon'ble Authority has held that the reimbursement by Industry Partner to the applicant, of the stipend paid to the trainees, does not attract tax under the GST Acts. The relevant extract of the judgement is reproduced below: "5.10 We find that, the applicant, is registered as Agent under National Employability Enhancement Mission ('NEEM') for facilitating and extending support for mobilizing trainees under NEEM Scheme of Government of India as per regulations under notification issued by All India Council for Technical Education (AICTE), for providing trainees on-the-job practical training in industries to enhance their future employability, For that purpose, for which they enter into agreements with various companies/organizations (called as industry partner) who impart actual practical training to the students. The applicant, in lieu of agreements with the industry partners, is engaged in preparing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ainer company to the applicant is not liable to tax under the GST Acts" The relevant extract of the judgement is reproduced below: "6.3 Regarding the issue of taxation of stipend, the company which is providing on the job training to the trainees is required to pay the stipend to the trainees and the applicant is only acting as an intermediary in collecting the same from the trainer companies to the students. The service is provided by the trainees to the trainer as the trainer is liable to make payment of the consideration. This consideration is paid through the applicant and the applicant is not allowed to make any deductions in that amount. Hence the applicant is only a conduit for the payment and the actual service is by the trainee to the trainer. Therefore this amount is not taxable in the hands of the applicant. 6.5 Regarding the third issue of payment of Group Insurance and Workmen compensation scheme is made by the applicant with the trainee being beneficiary. If any tax is liable on this transaction, it shall be collected by the insurance company, and the insurance company would be the service provider and the applicant will be the service recipient. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation. - For the purposes of this rule, the expression "pure agent" means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provi....