2019 (10) TMI 1092 - AAR - GST

Classification of service - service provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited - service provided by the Building owner to Sri DMS Hospitality Private Limited - Applicability of GST Notification No. 12/2017-Central tax (Rate) dated 28th June 2017 - Applicability of GST on EMI per month charged from Sodexo Food Solutions India Private Limited and security services provided by Sodexo Food Solutions India Private Limited. HELD THAT - The supply of services, in the facts and circumstances of the case, are classifiable as Rental or leasing services involving own or leased non-residential property under Service Code (Tariff) 997212. It is taxable in the hands of the landlord and is liable for GST at the rate of 18 percent - the applicant company has subleased the premises to M/s. Sodexo Food Solutions India Private Limited based on leave and license agreement dated 02-04-2018 for a rent of ₹ 5,25,000.00 per month. The supply of services is considered as rental or leasing services involving own or leased non-residential property and is liable for GST at the rate of 18 percent of HSN 997212. Providing of additional facilities like Dining Tables/ Chairs, Partitions, Water purifiers, Bunk beds with lockers, TV with DTH Connection - HELD THAT - The entire investment made is recovered with 12% interest per annum at the rate of ₹ 1,22,893/- per month. This amounts to supply of goods as per entry no. 1(c) of Schedule II to the Central Goods and Services Tax Act which reads any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of the full consideration as agreed, is a supply of goods . Accordingly it is liable to tax at the rate applicable to each of the goods at the time the delivery of the goods is given to Sodexo Food Solutions India Pvt. Ltd. Providing security services - HELD THAT - The supply is liable to tax as applicable under SAC 998529 and is liable to tax at 18% under entry 23(ii) of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 and is payable under Reverse Charge Mechanism by the recipient of service, if he is registered, as per Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.29/2018- Central Tax (Rate) dated 31.12.2018 (effective from 1.1.2019).

Summary

Issues involved:
1. Classification of services provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited.
2. Classification of services provided by the building owner to Sri DMS Hospitality Private Limited.
3. Applicability of GST Notification No. 12/2017-Central tax (Rate) dated 28th June 2017 regarding the exemption for renting of residential dwellings.
4. Applicability of GST on EMI per month charged from Sodexo Food Solutions India Private Limited and security services provided.

Analysis:

Issue 1: Classification of services provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited
The applicant sought an advance ruling on the classification of services provided, including rental or leasing services involving non-residential property. The Authority analyzed the agreements between the parties and concluded that the services provided fall under SAC 997212 and are taxable at 18%.

Issue 2: Classification of services provided by the building owner to Sri DMS Hospitality Private Limited
The Authority examined the agreements and determined that the services provided by the building owner to Sri DMS Hospitality Private Limited also fall under SAC 997212 and are taxable at 18%.

Issue 3: Applicability of GST Notification No. 12/2017
Regarding the exemption for renting of residential dwellings, the Authority found that the specific exemption under Notification No. 12/2017 was not applicable to the case at hand, as the premises in question were deemed non-residential based on the agreements and observations.

Issue 4: Applicability of GST on EMI and security services
The Authority ruled that the EMI charged for goods supplied constitutes a supply of goods under the CGST Act and is taxable at the applicable rates. Additionally, the security services provided are classified under SAC 998529 and are taxable at 18%.

In conclusion, the Authority provided detailed reasoning for each issue raised by the applicant, analyzing the agreements, relevant notifications, and GST provisions to deliver a comprehensive ruling on the classification and tax liability of the services provided in the case.