What Rate is applicable if services are provided to MSSDS under sub-contracting?
Applicant: In re M V Infra Services Pvt. Ltd.
Facts of the case:
- a) The applicant is likely to get sub-contract work of RPL (Recognition of prior learning) of Building & other Construction workers for imparting training of M V Infra Services skill development to Building & other Construction workers, from M/s Aditya Call Centre Pvt. Ltd., Bengaluru (“Mail Contractor), who participated in the tender called by Maharashtra Skill Development Society, Skill Development & Entrepreneurship Department, Government of Maharashtra and is expecting to get the assignment.
- b) The total expenditure of the said training programme is borne by the Government of Maharashtra 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.
- c) Entry No.72 of the Notification No. 12/2017-Central Tax (Rate) dated 06.2017exempts services provided to the State Government under any training programme for which total expenditure is borne by the State Government. In the instant case, the impugned training programme is hosted by the State Government of Maharashtra and hence the services provided under the said programme are exempt and accordingly main contractor is eligible for exemption.
- d) The services of main contractor are exempted and the applicant, through the main contractor, will be providing the same services to the Government of Maharashtra and hence the said services, to be provided by the applicant under sub-contract, also should be exempted
Observation & Conclusion:
- Authority proceed to examine the entitlement of exemption to the main contractor under entry numbers 69 & 72, of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, respectively one at a time. Entry No.69 exempts the services, covered under Service Code 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, Skill Development and Entrepreneurship Department, Government of Maharashtra which is neither NSDC nor a 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.
- According to entry No. 72, of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017,which exempts the services, covered under Service Code 9992, provided to the Central Government, State Government, Union Territory Administration under any training programme for which total expenditure is borne by the Central Government, State Government, 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 total expenditure is to be borne by the Government of Maharashtra. Therefore the main contractor would be eligible for exemption under entry No.72 of the said notification, subject to fulfillment of the aforesaid conditions.
- In the instant case, all the conditions are fulfilling except service recipient. Here, services would be provided to the Main Contractor i.e. the recipient of the services would be the Main contractor, but not the State Government. Therefore the required conditions are not fulfilled and hence the applicant is not entitled for exemption under entry No.72 ofNotification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
Thus, the services to be provided by the applicant are taxable at 18% IGST or 9% each of CGST KGST.
Conclusion: The rate of 18% GST is applicable on services to be provided under subcontract 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 the Sl. No. 69 or Sl. No. 72 of the notification 12/2017- Central Tax (Rate) New Delhi, dated 28th June, 2017 are not applicable to the applicant.