The Karnataka Appellate Authority for Advance Ruling ruled that Goods and Services Tax (GST) is leviable on reimbursement of the stipend to trainees on the grounds of the industry partner.
The petitioner, the Teamlease Educational Foundation, an authorized National Employability Enhancement Mission (NEEM) facilitator partners through several trainers and Employers/Companies/Industry (industry partners) for imparting training to NEEM trainees.
The objective of the National Employability Enhancement Mission (NEEM) is to offer job practical training to improve the employability of an individual either pursuing his or her Post-Graduate / Graduate / Diploma in any technical or non-technical stream or has discontinued studies after class 10th to enhance his / her employability.
The petitioner and the industry partner secure responsibilities according to NEEM regulations and hence to meet the responsibilities, the petitioner would impose an Administration Fee, Sourcing Fee, Enrollment Fee, reimbursement of the monthly stipend furnished to trainees on the grounds of the industry partner, and reimbursement of the cost of medical and accident insurance received for the welfare of trainees as approved via the Industry Partner.
Read Also: Goods and Services Tax Applicability on Employees Structure
The petitioner has collected the GST on the whole transaction value along with the reimbursement amounts and is of the view that the reimbursement obtained for the stipend is an expenditure according to rule 33 of the CGST Rules 2017 and hence these reimbursements must not be included from the taxable value and thus GST must not be imposed on those reimbursements.
Upon the application the Authority for Advance Ruling specified that the appellant does not meet the condition mentioned in rule 33 and would not be entitled as a pure agent, the aggrieved petitioner has approached AAAR.
The appellant head sees that the chores of furnishing enough training to the registered trainees along with the payment of the stipends to the trainees are a responsibility upon the appellant and as on it and their interest they need to move trainees to the premises of the company.
As deployment and completion of the training would be the activity embarked in his interest as a NEEM facilitator, the petitioner would lose to satisfy the definition of the pure agent.
Recommended: MH AAR: GST Not Applicable on Stipend Amount to Trainees
The Coram of Smt. Rajana Jha, Member and Smt. Shikha C, Member, during upholding the ruling provided by the lower council ruled that an insignificant agreement to use the stipend amount towards the payment to trainees along with the invoice mentioning these amounts respectively would not be mentioned that the petitioner is a pure agent and is forgiven of his liability.
