TaxTMI 
TaxTMI 
2025 (3) TMI 729
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....m premium of the students/trainees, as a pure agent under GST Laws, attracts GST? 3. Whether the reimbursement by the said Industries/Companies to the applicant, of the expenses incurred by the applicant in respect of uniform and safety shoes of the students/trainees, as a pure agent under GST Laws, attracts GST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act would mean CGST Act and MGST Act. 1. FACTS AND CONTENTION - AS PER THE APPLICANT: 1.1 The applicant had withdrawn Question Nos. 2 and 3 during the Preliminary Hearing held on 03.07.2024 and have further confirmed the same vide their letter dated 08.07.2024. Hence Applicant's submissions are only be in respect of Question No. 1 namely; "Whether the reimbursement by the said Industries/Companies to the applicant, of the expenses inc....
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....e Board for Technical Educations, and interview the candidates/trainees. b) to extend support for mobilisation of the selected Trainees for On-the-Job Practical Training at the premises of the industries. c) to impart necessary guidance to the trainees undergoing such On the Job Practical Training. d) To prepare monthly payroll for trainees on receipt of attendance from industries and get it verified / certified from Client Companies. e) To ensure timely payments of Stipend (in actuals, received from the companies) to the Trainees. f) to appoint co-ordinators to facilitate and assist the Client in managing the trainees. g) to continually comply with all terms and conditions of the agreements entered into, with the Client Companies. h) to maintain all records of attendance of trainees, their progress and such other records pertaining to trainees as may be necessary. Further, the applicant shall take appropriate actions upon receipt of written intimation from the Clients about occurrence of any incidences like any unlawful behaviour; repeated breach of the Client polices, or continues irregularity in attending the trainin....
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....tudents, for uniform, T shirt, apron and safety shoes provided to trainees. (d) Applicant will raise monthly bill on Industry for Administrative charges. In view of the above, Advance ruling is sought on following point, namely, "Whether the amount of reimbursement of actual amount of stipend payable to trainees which is received/receivable from Industry Partners is liable for tax under GST Laws?" View of the applicant: The applicant has entered into/will enter into a contract with Industry partners for imparting practical on job training as per the Learn and Earn Scheme of the Maharashtra Government & Universities to trainee students, undergoing internship/training at the Industry Partner. As per terms of agreement, it is the industry partner who is under obligation to pay stipend to trainees. The applicant is not at all liable to pay stipend to the trainees as per the agreement. In respect if such stipend payable to the trainees, the applicant is acting as a pure agent of the concerned Industry Partners, to receive the same from the Industry Partners and to distribute the entire amount, of such stipend received, to the trainees. As per the applicant, th....
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....ant does not use for his own interest such goods or services so procured and receives only the actual amount incurred to procure such services in addition to the amount received for supply it provides on its own account. Thus, in the instant case under consideration the applicant acts as pure agent to collect at actual basis the stipend from its Industry Partners, receives it separately, shows it on Invoices separately and distributes the stipend amount exactly as received to the trainees who are working in the Industry Partners premises thus supplying services. The applicant does not hold any title to the service supplied by the trainees to the Industry Partners and does not use the services for his own purpose. In view of the above submissions, and considering the legal provisions of GST Laws, the Applicant states that the amount of reimbursement of stipend received by it is not at all liable to tax as per provisions of CGST/SGST/IGST Acts and the rules made therein. 2. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW 2.1 The Goods and Service Tax (GST) regime has introduced the concept of supply as a taxable event while doing away with the erstwhile taxable eve....
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.... actually supplying their services to the Industry Partner by way of working in the factory premises as per the terms and conditions of the Industry Partner. 2.5 Therefore, in the instant case, the provisions of Rule 33 of the CGST Rules, 2017 as amended kicks in and the applicant must be treated as a pure agent in respect of stipend provided to the trainees. 2.6 In view of the submissions made herein above, the Applicant, insofar as payment of stipend is concerned, is a pure agent of the Industry Partner and therefore GST is not liable to be paid on such stipend received from the Industry Partner and paid to the trainees by the applicant. 2.7 In view of the above, the Applicant prays that the Hon'ble Advance Ruling Authority, Maharashtra be pleased to order that no GST is leviable on the stipend amount received and paid by the applicant. 3. CONTENTION - AS PER THE JURISDICTIONAL OFFICER: Taxpayer has made application on 25/07/2023 for Advance Ruling Authority (GST) Maharashtra State, Mumbai for following questions, 1. Whether the reimbursement by the said Industries/Companies to the applicant, of the expenses incurred by the applicant, in respect of sti....
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....ted that in respect of the reimbursement of Stipend amount received from Industry partner and paid to the trainees, the entire transaction is covered under the provision of Rule 33 of the CGST/MGST Rules 2017. Here we have to see that whether the applicant in any way acting as pure agent of industry partner. Brief facts of the case- M/S YASHASWI SKILLS LIMITED (Applicant) is registered Maharashtra Industrial Services as a training partner for implementation of Yashaswi's Learn and Earn Scheme. The student trainee of Yashaswi's Learn and earn scheme shall under no circumstances be deemed to be the employees of the client or of Yashaswi's Skill Ltd. Applicant has made an agreement with industry partner M/s Mahindra and Mahindra on dated 20.02.2023. Objective of which is to provide on the job training to the students. Applicant simultaneously approached to the universities or technical boards for enrolling the students for his learn and earn programme. One such agreement is made with Lamrin Tech Skills University Punjab on dated 11.01.2023. Another such agreement is made with Yashawantarao Chavan Maharashtra Open University on dated 30.01.2024. Applicant ....
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....ply 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 provides on his own account. Interpretation by Nodal Officer- In view of the above, I proceed to examine whether the applicant qualify to be a pure agent of the Industry Partner or not. In this regard, I invite reference of rule 33 of t....
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.... the applicant is not incurring the expenditure towards the stipend/insurance etc. later claiming the reimbursement but receives the said amounts and disburses the same and hence the applicant is not fulfilling the required condition. d) The provisions of Rule 33 have provided the conditions of the pure agent. Rule 33(iii) of the CGST Rules 2017 stipulates that the applicant must procure certain supplies from the third party, as a pure agent of the recipient of supply, which are in addition to the services he supplies on his own account. In the instance case, the applicant has not furnished any information with regard to procurement of supplies from the third-party i.e. Trainees. Thus, applicant is not fulfilling the required condition. Currently, the Applicant is collecting GST on the entire transaction value which is the price payable by Industry partner in accordance with section 15 of the MGST Act which includes administration fee, Education fee, Insurance, enrolment fee, mediclaim policy and reimbursement. Applicant enters into contractual agreement with Industry partner but nowhere mentioned that the applicant will act as a pure agent. In view of the above the app....
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....ed under the Companies Act, 2013 has developed a scheme of skill development courses on "learn & earn" basis for persons/students/ trainees in the age group of 18 to 30. The main object of the "learn & earn" program is enhancing the skill of the nation's youth and increasing their chances of employability by giving them practical experience and also an opportunity to them to earn for their education. 5.4 As mentioned above, the applicant has submitted that it has entered into agreements with various Universities as well as the Maharashtra State Board for Technical Education (MSBTE) to take forward the National Education Policy's recommendations to expose students to real life examples and make them globally competent by developing skill sets amongst them through internships, etc. using its skill development courses approved by the said Universities/MSBTE as part of their learning curriculum. It has further entered into agreements, for providing on the job training to students/interns/trainees, with various companies (Industry partners) like M/s Mahindra & Mahindra Ltd. Mumbai, LM Wind Power Blades (India) Pvt. Ltd. etc. for their plants in India. 5.5 As per the agreem....
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....uirement of the Industry Partner. The payment of stipend is made to the trainees who are actually supplying their services to the Industry Partner by way of working in the factory premises as per the terms and conditions of the Industry Partner. The applicant merely procures stipend amount from the Industry partner and pay to the trainees. The Applicant further submits that as the provisions of Rule 33 of the CGST Rules, 2017 the applicant acts as a pure agent in respect of stipend provided to the trainees and therefore GST is not liable to be paid on such stipend received from the Industry Partner and paid to the trainees by the applicant. 5.8 The jurisdictional officer has submitted that, the applicant is raising invoice for stipend, insurance cost, supervision charges, education fee and distributes the same to the trainees on receipt of the said amount but have not furnished any contractual agreement to incur expenditure first and to claim the said amounts later and therefore the applicant does not qualify to be a pure agent under the GST Laws. The jurisdictional officer has further submitted that as per the agreement with the Industry partners, submitted by the applicant, th....
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....ed the Rulings of AAR, Karnataka State in similar matters of M/s Asiatic Clinical Research Pvt Ltd. 2020(33) G.S.T.L. 42 (A.A.R.- GST Kar.); M/s Cadmaxx Solutions Education Trust 2020(32) G.S.T.L. 49 (A.A.R. - GST - Kar.), etc. (d) The applicant has further submitted that the Karnataka Appellate Authority for Advance Ruling vide its advance Ruling No. KAR/AAAR/04/2022 dt.06/ 07/2022 in case of M/s Team lease Education Foundation (TEF) mentions that TEF was an approved NEEM (National Employability Enhancement Mission) Facilitator floated by the All India Council for Technical Education (AICTE), which is a government body, wherein the AICTE had formulated courses and appointed TEF as a facilitator to further its objectives of providing physical on the job training to enhance employability of a person pursuing a Post Graduate/Graduate/ or Diploma Courses. In the said case, payment of stipend was to be made under the NEEM Regulations which had made the party responsible for paying stipend to the trainees to be paid as a single consolidated amount. But the Applicant has nothing to do with NEEM in the instant case. The Applicant is not at all a facilitator of any NEEM mission. T....
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....count of Stipend and then later on claims the same from the industries and this interpretation of the Officer is legally incorrect. The industries reimburse to the Applicant, exact stipend amount that has been paid/is payable to the trainees/interns. Therefore GST is not payable on the stipend amount paid to trainees by the applicant and reimbursed by the industry partners. 5.10 We observe that in pursuance of the National Education Policy, the University Grants Commission has recommended University-Industry (UI) Linkages for Enhancements of Student Internship and Apprenticeship in Academic and Industrial Systems. Some of the salient features of this scheme are as under: (a) University may introduce internship/apprenticeship irrespective of the field including Arts, Science and Engineering as per the UGC Curriculum and Credit framework for programmes as notified and amended from time to time. (b) The number of Internship and type of Internship may be decided by the University (c) The regulatory framework for the courses may be created by each university and industry or organization. (d) The Companies/ firms need to be encouraged to offer paid ....
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....udents to make them ready for examination, Uniform etc, and YSL charges these expenses separately in Invoices and also charges GST for these services. 5.13 Provisions of 'pure agent 'given in Rule 33 are reproduced as below. Rule 33 - Value of supply of services in case of pure agent Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,- (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- ....
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....pplicant is only acting as agent in collecting the stipend from the industry partners and then disbursing the same to the trainees in full since the applicant is not allowed to make any deductions from the stipend before disbursing the same to the trainees. The applicant is only a conduit for the payment of stipend and the actual service is supplied by the trainees to the trainer companies (industry partners) against which stipend is payable. In view of the above discussions, we hold that applicant is acting as 'pure agent'. 5.15 The facts of the case in Advance Ruling No. KAR ADRG 07/20222 dated 08.03.2022 in case of M/s Team lease Education Foundation are different. There, it is stated that as per Neem Regulations, responsibility to pay stipend is cast upon M/s Team Lease. In this case, UGC recommends that companies where students are placed for on-job-training need to be encouraged to offer paid internships to students. Hence, it is by virtue of agreement between the Applicant and the Industry partners that the arrangement of stipend is decided and Industry partners are required to reimburse the stipend amount. 5.16 In view of the above discussions, we hold that, t....