2021 (11) TMI 858 - AAR - GST

Classification of GST - applicant to provide the boarding, lodging facilities and such other agreed services, to AMSL - composite supply or a mixed supply? - principal supply or not - exemption under N/N. 12/2017-CT (Rate) dated 28.06.2017 - difference of opinion - HELD THAT - The applicant is engaged in the business of hospitality providing boarding, lodging facilities and such other services to AMSL, who is into training youth in various healthcare related vocational programs as part of implementation of its projects under Deen Dayal Upadhyay Grameen Kaushalya Yojana (DDU-GKY). AMSL has engaged the applicant to provide the boarding, lodging facilities and such other agreed services, to AMSL in line with the SOP given by the Government of India for the implementation and furtherance of its projects under Id DDU GKY. As per the terms of agreement entered into by the applicant with AMSL, the consideration payable shall include fixed and variable cost towards accommodation and provision of food and other facilities based on the actual number of candidates availing the services at the hostel. The applicant has stated that, their primary and predominant activity is to provide accommodation to the candidates at the hostel, the supply of food and other amenities is ancillary but an integral part of the principal supply. The applicant has stated that the activity is a composite supply, where the principal supply is accommodation services. The applicant has stated that SAC 996322 shall be applicable to their activities and the services are exempted under Sl.no. 14 of Notification no. 12/2017CT (Rate) dt. 28.06.2017. From the Schedule of Charges (Schedule III) of the Agreement, it is seen that ₹ 3500/ is fixed towards the Rent per Candidate, per month for regions of Chennai and ₹ 3000/ towards the Rent per candidate for the accommodation per month in any region out of chennai, which translates to per day equivalent tariff of ₹ 117/₹ 100 and the consideration for other supplies is ₹ 183/₹ 150 per day. The total consideration/ equivalent declared tariff as per the agreement for the composite supply per day, amounts to ₹ 300/- ₹ 250/- per candidate per day which is below the specified limit of ₹ 1000 per day. Therefore, I find that the exemption at SI.No. 14 of Notification no.12/2017 CT(Rate) dt.28.06.2017 is applicable to the case in hand. The supply envisaged in the agreement entered with AMSL is a composite supply of hospitality services in which provision of accommodation, food and other amenities are naturally bundled in the course of business and supplied in conjunction. The provision of accommodation is the principal supply, being provided to all the candidates (headcount wise) and the applicable SAC is 9963 and per day equivalent tariff being less than ₹ 1000, the exemption provided under SI.No.14 of Notification no. 12/2017-CT(Rate) dt.28.06.2017 is applicable to the ease in hand. In view of the difference in the opinions of the Members, the case is referred to the Appellate Authority for hearing and decision on this issue in terms of Section 98(5) of the CGST/TNGST Act 2017, which provides that where the members of the Authority differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question.

Summary

Issues Involved:
1. Applicable GST SAC code and GST rate for supplies made to AMSL.
2. Classification of the supply as composite or mixed.
3. Exemption status of the service under Notification No. 12/2017-CT (Rate) dated 28.06.2017.

Detailed Analysis:

1. Applicable GST SAC Code and GST Rate:
The applicant, engaged in providing hospitality services including boarding and lodging to AMSL, sought clarification on the applicable GST SAC code and rate. The services provided include accommodation, food, and other amenities to candidates under the DDU-GKY scheme. The applicant charges ?9,000 per candidate per month, split into ?3,500 for accommodation and ?5,500 for food and other facilities.

2. Composite or Mixed Supply:
The applicant argued that their services constitute a composite supply under GST law, with accommodation as the principal supply. They referred to Section 2(30) of the CGST Act, 2017, defining composite supply as two or more taxable supplies naturally bundled and provided in conjunction with each other. The applicant contended that the primary service is accommodation, with food and other amenities being ancillary.

However, the SGST member disagreed, classifying the services as business support services under SAC Code 998599, taxable at 18%. The CGST member, on the other hand, concurred with the applicant, identifying the services as a composite supply with accommodation as the principal supply, falling under SAC 9963.

3. Exemption Under Notification No. 12/2017-CT (Rate):
The applicant claimed exemption under Sl. No. 14 of Notification No. 12/2017-CT (Rate), which exempts services by hotels, inns, guest houses, etc., for residential or lodging purposes with a value of supply below ?1,000 per day. The applicant argued that their services qualify for this exemption as their per day equivalent tariff is below ?1,000.

The CGST member supported this view, noting that the total consideration per candidate per day is ?300, well below the ?1,000 threshold, thus qualifying for the exemption. The SGST member, however, did not address this exemption, focusing instead on the classification of the service.

Separate Judgments:
- SGST Member's Ruling: The services provided by the applicant to AMSL are classified as business support services under SAC Code 998599, taxable at 18%. The SGST member did not agree with the applicant's classification of the services as a composite supply of accommodation and other amenities.

- CGST Member's Ruling: The services are a composite supply of hospitality services, with accommodation as the principal supply, falling under SAC 9963. The services qualify for exemption under Sl. No. 14 of Notification No. 12/2017-CT (Rate) as the per day equivalent tariff is below ?1,000.

Conclusion:
Due to the differing opinions of the SGST and CGST members, the case was referred to the Appellate Authority for a final decision, as per Section 98(5) of the CGST/TNGST Act, 2017.