Applicant is expected to get sub contract work, of imparting training of soft skill development to Engineers, ITI students, Building and other construction workers, from a contractor who provides the aforementioned service to the State Government. The services provided by the main contractor to the State Government is exempt by virtue of following entry in exemption notification –
“Services 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.”
Clarification has been sought on the rate of tax applicable on services provided by the applicant to the main contractor and whether the same is exempt, as the services of main contractor is exempted and the applicant is providing the same services to the State Government through the main contractor.
As per the exemption entry, the training services is exempt only if such services are provided to the State Government. Since the applicant provides the services to the main-contractor but not the State Government, the same shall not be exempt and are taxable at 18% GST.
Source: [2020] 115 taxmann.com 61 (AAR – KARNATAKA)
