2019 (4) TMI 1451 - AAR - GST

Levy of GST - activity of providing the hostel on rent to various boarder - whether the hostel will be covered under the hotel, inn guest house, club or campsite or not. In this regard the term hostel is neither defined in any of GST Acts? - HELD THAT - On observation of documents/brochure/submitted by the applicant it is evident that the girls residing in both the hostels are provided with various facilities like food supply from canteen, parking space, coaching, library, entertainment which are all taxable supplies. Apart from above they are also provided with the provision of guest rooms for visiting parents of the occupants. All the facilities are only for the occupants of the hostels. The girls residing there are neither allowed to have food from outside nor are outsiders allowed to have food from hostel canteen. Thus the accommodation facility at hostel is the only principal supply and all the other facilities are inter-related as they are provided exclusively to the occupants of hostel only, without any extra charge. It has categorically been stated by the applicant that no other charges other than above amount is collected from the occupants on account of other allied facilities being provided. The amount received for providing taxable supplies in hostel under Notification No. 12/2017 (Rate) illustrating lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. The lump sum amount received per unit (bed) per day against the accommodation services in hostel is to be treated as exempt supply. The amount received for providing taxable supplies in hostel under Notification No. 12/2017 (Rate) illustrating lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. The lump sum amount received per unit (bed) per day against the accommodation services in hostel is to be treated as exempt supply.

Summary

Issues Involved:
1. Whether the activity of providing the hostel on rent to various boarders is exempted from GST.
2. If taxable, under which service access code the same is taxable.

Detailed Analysis:

Issue 1: Exemption of Hostel Services from GST
The applicant, a charitable trust, is running girls' hostels providing basic facilities like well-furnished residence, security, food, and parking for a nominal fee of ?6000 per month per boarder. The trust argued that their services should be exempt from GST under Entry No. 12 of Notification 12/2017-Central Tax (Rate), which exempts services by way of renting of residential dwelling for use as residence.

The hostel's services were examined under the definition of "hostel" from various dictionaries, which generally describe a hostel as an establishment providing inexpensive lodging for specific groups like students. The applicant contended that their hostel services should be considered as providing residential dwelling on rent, thus qualifying for GST exemption.

The applicant also cited Circular No. 32/06/2018-GST dated 12-Feb-2018, which clarifies that hostel accommodation services by trusts, having declared tariff below ?1000 per day, are exempt from GST.

Issue 2: Taxability and Service Access Code
If the hostel services were found to be taxable, the applicant sought clarity on the applicable service access code. The applicant argued that their services fall under SAC code 9963 or Heading 9972, which are shown as nil due to the exemption notification.

Legal Position, Analysis, and Discussion:
The Authority for Advance Rulings (AAR) examined the nature of the hostel services provided by the applicant. The hostel offers various facilities such as canteen, parking, hot water, guest rooms, and a temple, all included in the nominal lump-sum fee. The AAR considered the provisions of the Chhattisgarh GST Act, particularly sections defining composite supply, principal supply, and exempt supply.

The AAR noted that the hostel services are a composite supply where the principal supply is the accommodation, and other facilities are ancillary. The lump-sum fee charged is below ?1000 per day, which qualifies for exemption under Notification No. 12/2017-Central Tax (Rate), Serial No. 14, Chapter 9963.

Conclusion:
The AAR ruled that the activity of providing accommodation services by the applicant in their hostel, for which the applicant is collecting an amount below ?1000 per day and no other charges for allied facilities, merits exemption under Notification No. 12/2017-State Tax (Rate), Serial No. 14, Chapter 9963. The amount received for such supply qualifies as nil rate tax-exempted supply.