The Maharashtra Authority of Advance ruling (AAR) in the case of M/s Patle Eduskills Foundation, Order dated 08.06.2022, has ruled that GST is not payable on the reimbursement of stipend paid to trainees by industry partners.
Here, the applicant is in the business of Human Resource & Skill Development and is a facilitator under the National Employability Enhancement Mission (NEEM Scheme) of the Government of India.
The primary objective of the NEEM Scheme, notified through the All India Council of Technical Education (AICTE), is to generate skilled labour by making provision for facilitating “on job practical training” to trainees to enhance employability of a person. The Scheme is available to persons either pursuing Post Graduation/Graduation/ Diploma in any technical or non- technical stream or somebody who has discontinued studies after class 10.
The applicant, as a NEEM facilitator, is identifying and enrolling trainees to the Trainer Institutes for which they charge a fixed fee of Rs. 1500/- per trainee per month on which it also discharges tax. The entire process is done under a written agreement between the Entities/Trainer Institutes and the applicant.
The applicant, in lieu of agreements with the industry partners, prepares monthly attendance records of the trainees, processes stipends of the trainees, makes payment of stipend to the apprentices and discharges all functions as mandated under NEEM Regulations.
The applicant has sought the advanced ruling on the issue whether the Applicant, in the capacity of being a NEEM facilitator, acts as a ‘Pure Agent’ while receiving reimbursement of stipend amounts from the various Trainer Institutes and remitting the same to the trainees.
The AAR observed that the applicant is only a conduit for the payment of stipend and the actual service is supplied by the trainees to the Entities/Training Institutes against which stipend is payable. The amount of stipend received by the applicant from the Entities/Training Institutes and paid in full to the trainees is not taxable in the hands of the applicant.
The AAR held that the stipend paid by Entities/Training Institutes to the applicant to be further paid to the trainees in full does not attract GST and is not required to be added to the taxable value.