2022 (6) TMI 1167 - AAR - GST

Exemption from GST - activity of providing the hostel facility on the rent to various students by applicant is exempt (where hostel fees charged per student per day is much less than Rs.1000/-) - composite supply or mixed supply - Applicability of entry of Notification No.12/2017-Central Tax (Rate) (as amended time to time) dated 28.06.2017 - lack of requisite documents - HELD THAT - In order to examine the applicability of exemption/ taxability, there should be documentary evidences which support the contention of the applicant - In the instant case, documentary evidence like rent/lease agreement of the premises and License from the Local authority in respect of Hostel are keenly required. Further, Brochure mentioning thereunder the facilities / services which to be provided to the occupants of the said Hostel and Break up of fees to be charged from the occupants is also required to decide whether it is accommodation lodging service or otherwise. It is found that the services to be supplied in the present case are more than two but in the absence of Brochure of Hostel facilities, Break-up of fees in respect of facilities/services to be provided, License from the Local Authority, Details of rooms occupancy and Rent/ lease Agreement etc; we are not in the position to decide whether the accommodation services alongwith allied services like service of Light, water, food etc. are only to be provided by Hostel or other services will be there. In the absence of above required documents/information, we are not in position to decide whether the said supply is mixed or composite supply. Thus, in absence of supporting documentary evidence in support of services to be provided by the applicant, how it can classify in HSN provided in the CGST Act, 2017 and thus there is no question to discuss the exemption under Sr. No. 14 of the of the Notification No. 12/2017-CT(Rate) dated 28.06.2017 - no ruling advanced for want of requisite documents.

Summary

Issues Involved:

1. Applicability of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 for hostel services.
2. Determination of tax liability on hostel services provided by the applicant.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 for hostel services:

The applicant, M/s Gurkripa Career Education Private Limited, sought an advance ruling on whether the hostel facility provided to students is exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The applicant argued that the hostel facility, which includes well-maintained residence, light, water, and food, is provided for a nominal fee of Rs. 1,02,000/- per year per student, i.e., Rs. 279/- per day, which is below the threshold of Rs. 1000/- per day specified in the notification.

The applicant contended that the hostel services should be treated as a composite supply under Section 2(30) of the CGST Act, with accommodation being the principal supply. The applicant also referred to various definitions and judicial pronouncements to support their claim that hostel services fall under the term "by whatever name called" as mentioned in the notification, thereby qualifying for the exemption.

2. Determination of tax liability on hostel services provided by the applicant:

The applicant's interpretation was that the hostel services provided are exempt from GST under Sr. No. 14 of Notification No. 12/2017-Central Tax (Rate), which exempts services by a hotel, inn, guest house, club, or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day.

The Advance Ruling Authority examined the submissions and found that the applicant did not provide sufficient documentary evidence to support their claim. The applicant failed to submit a rent agreement, license from the local authority, brochure of hostel facilities, and a break-up of fees charged. Without these documents, the Authority could not determine whether the services provided were composite or mixed supplies and whether they qualified for the exemption.

The Authority referred to CBIC Circular No. 32/06/2018-GST dated 12th February 2018, which clarifies that hostel accommodation services, including those provided by trusts, are exempt if the declared tariff is below one thousand rupees per day. However, due to the lack of supporting documents, the Authority refrained from pronouncing a ruling on the exemption applicability.

Conclusion:

The Advance Ruling Authority concluded that without the necessary documentary evidence, it could not determine the nature of the services provided by the applicant and their eligibility for the exemption under Notification No. 12/2017-Central Tax (Rate). Therefore, no ruling was extended on the clarifications sought by the applicant.