M/s M.V. Infra Services Pvt. Ltd. (AAR-Kar) 2020 ITL (GST) 136

GST is chargeable at the rate of 18% on services to be provided under sub-contract to main contractor, who in turn provides to M/s Maharashtra State Skill Development Society, in respect of training of building and other construction workers (skill development training)

Case Details:-

Facts of the case:-

• M/s M.V. Infra Services Pvt. Ltd. (applicant) is registered under GST in the state of Karnataka. The applicant is engaged in providing composite work contract services of erection, foundation, electrical works, painting of communication towers and their maintenance.
• They are expected to get sub contract work, of imparting training of soft skill development to engineers, ITI Students, building and other construction workers from M/s Adityaa Call Centre Private Limited, bengaluru, who are the main contractor exclusively engaged in skill development training & are likely to get the main contract work.
• The total expenditure of the said training programme is borne by the Maharashtra Government under its flagship Skill Development Mission, The applicant, though under sub-contract, will be providing services to Maharashtra State Skill Development Society, Skill Development & Entrepreneurship Department, Government of Maharashtra in a “bill to- ship to model”.

Question before AAR:-

What is the rate of tax applicable on services provided under sub contract to main contractor, who in turn provides to M/s Maharashtra State Skill Development Society (MSSDS), in respect of training of building and other construction workers (skill development training) and admissibility of sl. No. 69 and 72 of the Notification 12/2017- Central Tax (Rate) New Delhi, dated 28^th June, 2017.

Submission of Applicant:-

• The applicant submits that the Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 exempts any service provided by National Skill Development Corporation set up by the Government of India; Sl. No. 69 of the said notification is applicable to the main contractor and hence the said company is eligible for exemption in terms of clause (d) in relation to condition (iii).
•  Further, if Sl. No. 69 is not applicable, Sl. No. 72 is applicable to the main contractor and the services provided by the main contractor in respect of training of building and other construction workers to MSSDS, Maharashtra are exempted.
• The applicant further contends that the services to be provided by them to the main contractor are also exempted as the services to be provided by the main contractor are exempted.
• The applicant intends to rely on the Advance Ruling given by this authority in the case of M/s Quatro Rail Tech Solutions Limited 2019 (10) TMI 1134- AAR, Karnataka and also the ruling in the case of M/s NHPC Limited 2019 (3) TMI 837- AAR, Uttarakhand.

Findings of AAR:-

• Entry No. 69 exempts the services covered under SAC 9991 or 9992 or 9983, provided by (a) the National Skill Development Corporation (NSDC) set up by Government of India, (b) a Sector Skill Council (SSC) approved by the NSDC, (c) an assessment agency approved by the SSC or NSDC, (d) a training partner approved by NSDC or SSC; in relation to (i) National Skill Development Programme implemented by NSDC, or (ii) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or (iii) any other scheme implemented by NSDC.
• In the instant case, the tender has been called by Maharashtra State Skill Development Society which is neither NSDC nor SSC. The tender was meant for empanelment of “Training Providers”. The applicant has not furnished any documentary evidence so as to arrive at whether the main contractor qualifies to be a training partner, approved by either NSDC or SSC, or not. Further, the training providers are not entitled for exemption under the entry no. 69. Therefore, the main contractor, in case if they get the said work, would not be entitled for exemption under this entry for the said work.
• Entry No. 72 of the Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 exempts the services, covered under SAC 9992, provided to Central or State Government, Union Territory Administration under any training programme for which total expenditure is borne by the Central Government, State Government or Union Territory Administration. In the instant case, the main contractor, if they get the work, would be providing service, of training for Recognition of Prior Learning (RPL) to construction workers, to the Government of Maharashtra, for which the total expenditure is borne by Government of Maharashtra. Therefore, the main contractor would be eligible for exemption under this entry.
• But, in case of the applicant, the services to be provided by the applicant would be provided to the main contractor and not to the State Government. Therefore, the conditions stipulated under entry no. 72 are not fulfilled.

Ruling of AAR:-

Order of Advance Ruling Authority

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