The Maharashtra Appellate Authority for Advance Rulings (AAAR) recently ruled that the reimbursement amount received by the taxpayer from the National Employability Enhancement Mission (NEEM) Trainer, which covers stipends and other expenses incurred on NEEM Trainees, should be considered as a ‘pure agent’ transaction according to Rule 33 of the Central Goods and Service Tax Rules, 2017. As a result, this amount should be excluded from the value of supply.
The appellant, originally known as CLR Skills Foundation and later renamed First Bridge Skill Foundation, and then Beep Skills Foundation, and currently operating under the name of Beeup Skills Foundation in October 2021.
The assessee filed an appeal under Section 100 of the CGST Act. The appeal aimed to challenge the decision of the Advance Authority Ruling, request a personal hearing, and seek an appropriate order.
The appellant argued that the advance ruling sought was related to a specific business rather than a particular contract. It emphasized that the business was ongoing and being conducted by the appellant at the time of the advance ruling application.
It was contended that the AAR had misinterpreted Section 95 of the CGST Act by narrowly interpreting the phrase about the supply of goods or services or both being undertaken or proposed to be undertaken by the assessee to not apply only to particular contracts, rather considering the context of the entire business.
Arun Jain, the representing counsel for the appellant, argued that all the criteria for being classified as a pure agent were met and thus the “stipend amount and other expenses incurred by the assessee under NEEM Regulations to ensure the wealth, safety, and health of NEEM Trainees” should not be included in the value of supply made to the NEEM Trainees. However, the appellant does not question its liability to pay GST on administrative fees and sourcing fees.
The Authority observed that the appellant did not fulfil the conditions and clauses defining a pure agent as stated under Rule 33 of the CGST Rules. Accordingly, the appellant was not entitled to claim a deduction for the reimbursement of stipends and other expenses received from the NEEM Trainer from the value of supply.
In conclusion, the two-member bench consisting of Rajeev Kumar and Srinivas upheld the decision of the Maharashtra Authority of Advance Ruling. The bench stated that the reimbursement sum received by the appellant from the NEEM Trainer for stipends and other expenses was not considered under the capacity of a pure agent.
| Applicant Name | M/s Beeup Skills Foundation |
| GSTIN of the applicant | 27AAGCCOS33K IZE |
| Order No | MAH/AAAR/DS-RM/01/2023-24 |
| Present for the Appellant | Mr. Arun Jain, Advocate |
| Maharashtra GST AAAR | Read Order |
