No GST Leviable on Reimbursement of Stipend Amount Received from NEEM Trainer as a pure agent: AAAR [Read Order]

The Maharashtra Appellate Authority For Advance Rulings (AAAR) held that the reimbursement amount received by the assessee from the National Employability Enhancement Mission( NEEM) Trainer towards stipend and other expenses incurred by the assessee on NEEM Trainees under (NEEM) Regulations is in the capacity of ‘pure agent’ under rule 33 of the Central Goods and Service Tax Rules, 2017 was excluded from the value of supply. 

The appellant assessee was originally incorporated as CLR Skills Foundation and applied ruling under the same name and the name was changed to First Bridge Skill Foundation, which was again changed to its present name Beep Skills Foundation, which was further changed on 8.10.2021to Beeup Skills Foundation. 

The assessee preferred the appeal under Section 100 of the CGST Act to quash the decision of Advance Authority Ruling, to grant a personal hearing, and to pass an appropriate order. 

The assessee stated that he had sought an advance ruling in relation to a particular business and not concerning a particular contract and stressed that the business was ongoing and carried on by the assessee on the date of making the advance ruling application. 

It was submitted that the AAR had erred in giving a very narrow meaning to Section 95 of the CGST Act and the meaning of the phrase about the supply of goods or services or both being undertaken or proposed to be undertaken by the assessee was not to be read in the context of one of the contracts, but it had to read in the context of the business. 

Arun Jain was appeared on behalf of the assessee and contended that the assessee was fulfilling all the criteria laid down for a pure agent and not liable to include the “Stipend amount and other expenses incurred by the assessee under (NEEM) Regulations to ensure wealth, safety and health of NEEM Trainees” in the value of supply made to NEEM Trainee and the assessee does not dispute its liability to pay GST on administrative fee and sourcing fees. 

The Authority observed that the assessee did not fulfill the conditions and clauses of the meaning of pure agent prescribed under rule 33 of the CGST Rules and the assessee was not allowable to claim a deduction of the reimbursement of the number of stipends and other expenses received from the NEEM Trainer from the value of supply. 

The two-member bench comprising Rajeev Kumar and Srinivas upheld the decision of the Maharashtra Authority of Advance Ruling and held that the reimbursement amount received by the assessee from NEEM Trainer towards stipend and other expenses incurred was not in the capacity of pure agent. 

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