2022 (6) TMI 252 - AAR - GST

Applicable GST SAC and GST rate - Supply of service - Composite Supply or Mixed Supply - providing boarding and lodging to the students undergoing training under healthcare related vocational program - applicability of serial no. 14 of Notification No. 12/2017 dt 28.06.2017 - HELD THAT - The applicant states that he is providing lodging and boarding to students undergoing training under healthcare related vocational program under Deendayal Upadyay Grameen Kaushalya Yojana (DDU-GKY) by charging Rs.9000/- per candidate per month; of which Rs.3500/- is towards rent for accommodation at fixed cost and Rs.5500/- towards food on head count/actual number of candidates - According to the applicant, the chapter heading 9963 at serial no. 14 of Notification No. 12/2017 dt 28.06.2017 describes such services for residential or lodging purposes and exempts the same if the value of supply of a unit of accommodation is below Rs.1000/- per day. The applicant states that he is charging only Rs.9000/- per month which amounts to Rs.300/- per day for both accommodation and food as a composite supply. Further that the supply of food is ancillary to accommodation and accommodation being the principle supply, hence he claims that their service is exempt from tax in view of this entry. As seen from the information serviced by the applicant, the rent is fixed at the rate of Rs.3500/- whereas the food is charged at Rs.5500/- as per the head count or actual number of candidates. This means that the price is variable to the extent of food supplied and this is not a single price the customer pays, no matter how much of the package is actually received. For the above reason, the two supplies are not integral to one another. There are two distinct supplies in this contract one for accommodation and the other for food - The SAC for supply of accommodation is 99631 and as enumerated at serial no. 14 of Notification No. 12/2017 dt 28.06.2017 this is exempt in the present case as per day rent is below Rs.1000/- - The SAC for supply of food is 99633 and taxable at the rate is i. 6% CGST SGST each with ITC upto 14.11.2017. ii. 2.5% CGST SGST each without ITC thereafter from 15.11.2017 onwards - There are two distinct supplies in this contract one for accommodation and the other for food - the service is not exempted vide Notification No. 12/2017 CT(Rate) dated 28.06.2017.

Summary

Issues involved:
1. Determination of applicable GST SAC and GST rate for the service provided.
2. Classification of the supply as a composite supply or a mixed supply.
3. Assessment of whether the service is exempted under Notification No. 12/2017.

Analysis:

Issue 1: Determination of applicable GST SAC and GST rate:
The applicant sought clarification on the applicable GST SAC and GST rate for the service provided. The Authority examined the nature of the service, which involved providing boarding and lodging to students undergoing training under a vocational program. The applicant charged Rs. 9000 per candidate per month, with a portion allocated to rent for accommodation and another portion for food. The Authority referenced Notification No. 12/2017 and identified the SAC for accommodation as '99631,' which was exempt if the daily rent was below Rs. 1000. For the supply of food, the SAC was '99633,' with tax rates varying based on the period. Initially, the rate was 6% CGST and SGST with ITC up to 14.11.2017, and later reduced to 2.5% CGST and SGST without ITC from 15.11.2017 onwards.

Issue 2: Classification of the supply as composite or mixed:
The Authority analyzed whether the service provided constituted a composite supply or a mixed supply. The applicant argued that the service was a composite supply as the accommodation and food were bundled together, with accommodation being the principal supply. However, the Authority found that the pricing structure indicated variable pricing for food based on the headcount, making it distinct from the accommodation cost. Citing the definition of composite supply in Section 2(30) of the CGST Act, the Authority concluded that the two supplies were not naturally bundled and integral to each other, thus classifying them as distinct supplies.

Issue 3: Exemption under Notification No. 12/2017:
The applicant inquired whether the service provided was exempted under Notification No. 12/2017. The Authority determined that the service did not qualify for exemption under the mentioned notification due to the distinct nature of the supplies provided, i.e., accommodation and food. The ruling clarified that the service did not meet the criteria for exemption as outlined in the notification.

In conclusion, the Authority provided detailed analysis and rulings on each issue raised by the applicant regarding the GST SAC, GST rate, classification of the supply, and eligibility for exemption under Notification No. 12/2017. The decision was based on a thorough examination of the facts presented and relevant provisions of the GST Act.