By rejecting the appellant’s appeal, the Maharashtra Appellate Authority for Advance Ruling (AAAR) determined that the reimbursement of the stipend received from the National Employability Enhancement Mission (NEEM) trainer by the NEEM facilitator under the AICTE’s NEEM regulations is not done in the capacity of a pure agent and is therefore subject to Goods and Services Tax (GST).
The Appellant M/s Beeup Skills Foundation being eligible to register as NEEM Facilitator, applied for and granted registration as NEEM Facilitator by All India Council for Technical Education Act (AICTE).
Before initiation of training under NEEM, a Trainee must first enrol himself with the Appellant by signing a contract letter in the format prescribed in Annexure-II to AICTE (NEEM) Regulations. The contract letter is neither an offer of employment nor a guarantee of employment.
According to the agreement between Trainer and appellant/facilitator, the Trainer shall, in consideration of dedicated deployment of Trainees to the company (Trainer) has to pay a monthly stipend to the appellant to be used solely for the purpose of paying NEEM Trainees in accordance with NEEM Regulations, which shall be equal to or greater than the minimum wages for unskilled category.
The appellant claimed that the reimbursement amount received by the Appellant from NEEM Trainer towards “Stipend and other expenses incurred by the Appellant on NEEM Trainees in accordance with AICTE (NEEM) Regulations” is in the capacity of pure agent under rules of 33 of the Central GST Rules, 2017, which shall be excluded from the value of supply.
During the personal hearing, the appellant reiterated that as a NEEM Facilitator, the appellant satisfied all the conditions of a “pure agent” and therefore, he is not liable to GST on the reimbursement of the stipend amount received from NEEM Trainer.
The appellate bench observed that, to qualify mere receiving payment under the cover of reimbursement of “Stipend amount and other expenses incurred by the Appellant in accordance with AICTE (NEEM) Regulations, by the trainer as a payment received by a pure agent, it should satisfy all parameters under Rule 33 of the CGST Rules namely; Authorisation, Invoicing, Additional Supply.
Further noted that the activity of deploying trainees to the Company to undergo training is undertaken by the Appellant in his own interest as a NEEM Facilitator. While the NEEM Regulations make provisions for the NEEM Facilitator to partner with Companies/Industries to provide the training, it makes the Facilitator responsible for payment of stipend and for issue of the training completion certificate. It is the responsibility of the Facilitator to furnish data of the trainees to AICTE.
The appellant drew the attention of the appellate bench to the Karnataka Authority for Advance Ruling in the case of Cadmaxx Solutions Education Trust and Yashswi Academy for Skills. In these AARs, it has been held that the stipend amount required to be paid by the trainer to the trainee, which is paid through the applicant (a NEEM Facilitator) is not taxable in the hands of the applicant since the applicant is only acting as a pure agent.
However, the bench of Rajeev Kumar Mital and Dr. D.K. Srinivas stated that appellant does not fulfil the conditions and clauses of meaning of “pure agent prescribed under rule 33 of the CGST Rules. Hence, the appellant is not allowable to claim deduction of the reimbursement of the amount of stipends and other expenses received from the NEEM Trainer from the value of supply and liable to GST.
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