TMI Blog2021 (8) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... llecting the stipend from the companies 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. Hence the amount of stipend received by the applicant from the industry partners and paid in full to the trainees is not taxable at the hands of the applicant. The reimbursement by Industry Partner to the applicant (YAS), of the stipend paid to the trainees, does not attract tax under the GST Acts. - GST-ARA-83/2019-20/B-47 - - - Dated:- 20-8-2021 - SHRI. RAJIV MAGOO, AND SHRI. T.R. RAMNANI, MEMBER PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. YASHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their individual bank accounts D) Providing uniform and safety shoes (as per requirement of industry partner) to the trainees E) Take Insurance policies towards Employee Compensation and Personal Accident Policy for trainees. Consideration or monetary aspect and invoicing: 2.5 For carrying out the above mentioned functions, YAS gets fixed professional service charges fees per candidate, per month from the Industry partner. YAS issues invoices specifying separately the professional service charges and amount for reimbursement of Actual expenses incurred on behalf of industry partner towards: 1. Stipend paid to the trainees 2. Actual cost of uniform and safety shoes provided by YAS to the trainees 3. Actual cost of Insurance Premium towards Employee Compensation and Personal Accident Policy. 2.6 Minimum stipend payable by industry to trainee is fixed by the Government considering nature of work to work as trainee and educational qualification of trainee. 2.7 The uniform, safety shoes are as per requirements of the industry partner and are purchased in the name of YAS. 2.8 Insurance policy is in the name of YAS specifying the names of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of service. Hence the expenditure on behalf of industry will qualify as agent. 2.12 YAS does not procure goods and services for his own interest. Shoes, uniform and insurance premium are not for use of YAS. YAS gets reimbursement of actual amount incurred for procurement of goods and/or services on behalf of principal (industry Partner). 2.13 YAS gets separate charges for providing the services of selecting Apprentices, preparing stipend statement and disbursing stipend, taking out insurance policies, procuring uniform and safety shoes. 2.14 The Authority for Advance Ruling - Karnataka under GST Act in similar case of CADMAXX SOLUTION EDUCATION TRUST has held that reimbursements for stipend and insurance premium are not taxable under GST (ref : KAR ADRG 85/2019 DATED 25/09/2019. 2.15 Considering all the above facts and legal provisions the Applicant contends that the receipts on account of reimbursements for stipend, uniform, shoes, insurance premium are not taxable in the hands of Applicant under CGST/SGST Acts. APPLICANT SUBMISSIONS DATED 27.07.2021:- 2.16 Article 41 of the Constitution provides Directive principles which state that the State sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s third party aggregator enters into agreement with industrial establishments for imparting actual training to the trainees. The agreements are required to be in conformity with the scheme and regulation under Apprentice Act. Therefore, all agreements, in sum and substance, are identical. The applicant has attached one agreement with Gharda Chemicals Ltd. as specimen. 2.17.3 The monthly attendance of the trainees is to be jointly prepared and shall be certified by officer of the establishment, the establishment will pay the consolidated sum of stipend payable to trainees to the Applicant, who in turn will pay it to respective trainees. Only the actual amount of stipend is thus paid to the trainees through the Third Party aggregator . The Invoice, Statement of Trainee wise Stipend paid and calculation of stipend makes it crystal clear that the applicant has acted as conduit for disbursement of stipend. The character of amount received for disbursement of stipend on behalf of industry partner/establishment: 2.18 The consideration by way of stipend is legally and contractually payable by industry or establishment imparting actual training to the trainees. Whatever am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 trainers to the trainees. Therefore, the reimbursement by the industry partner to the applicant of the stipend paid to students is not taxable in the hands of the applicant. 2. Whether the reimbursement by Industry Partner to M/s Yashaswi Academy for Skills of the insurance premium attracts GST? Ans: The payment of insurance premium towards Employee Compensation and Personal Accident 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. If the same is reimbursed to the applicant by the trainer company industry partner), as per the terms of the agreement, this amounts to reimbursement of the premium paid and hence, this amount reimbursed would not be taxable in the hands of the applicant. 3. Whether the reimbursement by Industry Partner to M/s Yashaswi Academy for Skills of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged under the Apprentice Act 1961. The applicant for such purpose enters into a written agreement with such industrial establishments (industry partner) as per which : the applicant prepares monthly attendance record of the apprentices, getting it certified from the Company ; processes stipends of the apprentices ; makes payment of stipend to the apprentices in their individual bank accounts ; provides uniform and safety shoes (as per requirement of industry partner) to the trainees ; takes Insurance policies towards Employee Compensation and Personal Accident Policy for trainees. For the said services, the applicant receives from the industry partner: fixed professional service charges fees per candidate, per month; reimbursement of Stipend paid to the trainees; reimbursement of actual cost of uniform and safety shoes provided by the applicant to the trainees and reimbursement of the actual cost of Insurance Premium towards Employee Compensation and Personal Accident Policy. 5.5 Further, the applicant has also submitted that, the minimum stipend payable by industry to trainee is fixed by the Government considering the nature of work of the trainees and educational qualification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainees without any amount being retained. Thus, the applicant is only acting as an intermediary in collecting the stipend from the companies 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. Hence the amount of stipend received by the applicant from the industry partners and paid in full to the trainees is not taxable at the hands of the applicant. Hence, in view of the submissions made by the applicant and also in agreement with the observations made by the jurisdictional officer, it is held that the reimbursement by Industry Partner to the applicant of the stipend paid to students does not attract GST. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-83/2019-20/B-47 Mumbai, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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