9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 1561 - AAR - GSTEligibility for GST exemption on hostel accommodation services - whether the hostel accommodation being provided by the Applicant to students and working women qualify to be a residential dwelling for use as residence as described in the above entry and thus eligible for exemption or not? - HELD THAT - The term residential dwelling has not been defined either under CGST Act or under Notification No. 12/2017. However under the erstwhile service tax law in paragraph 4.13.1 of the Taxation of Services An Education Guide dated 20.06.2012 issued by the CBIC the expression residential dwelling has been interpreted in terms of the normal trade parlance as per which it is any residential accommodation but does not include hotel motel inn guest house campsite lodge house boat or like places meant for temporary stay. It is clear that the purpose and objective of the notification is nothing but to avoid taxing residential properties taken on rent by family or individuals and the benefit of exemption is not extended to the premises which do not qualify as residential dwelling for use as residence. Further unless the twin conditions of renting of residential dwelling for use as residence being inter-twined and inseparable are not met the exemption is not available. As per settled position in taxation laws especially when exemptions or concessions or benefits are to be availed the interpretation is to be literally and strictly construed and not in liberal terms. In effect the place rented out is neither a residential dwelling nor being rented out for use as residence. It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 and under the identical Notification under the TNGST Act 2017 and also under Entry 13 of Exemption Notification No.09/2017-IT(Rate) dated 28.06.2017 as amended. Requirement for GST registration based on turnover - HELD THAT - It is clear that the Applicant s service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 as amended the Applicant is very much be required to take registration under the GST Enactments as the arrangement between the Applicant and the hostel occupants is liable to be classified as transaction in the course of furtherance of business and hence as per Section 7(1)(a) of CGST Act 2017 read with Entry No. 2(b) of the Second Schedule to the CGST Act the said transaction constitutes supply - the Applicant is required to get themselves registered in the state of Tamil Nadu if their aggregate turnover in a financial year exceeds twenty lakh rupees. Taxability and applicable GST rate for hostel accommodation services - HELD THAT - It is observed that hotels are meant for a temporary stay (2-5 days) and have lot of facilities and staff but hostels are used for a longer period and have basic facilities with minimal staff required by the inmates to stay at a reasonable rate. Therefore hostel services cannot be equated to a hotel accommodation and hotel GST rates cannot be applied to a hostel. Therefore the supply of hostel accommodation services (Tariff heading 9963) is taxable @ 9% CGST 9% SGST under Sl. No. 7(vi) of the above Notification (Sl.No. 7 (ix) as per original notification). Tax treatment of in-house food supply as part of hostel services - HELD THAT - The natural bundle has the characteristic of where one service is the main service and the other services are ancillary services which help in better enjoyment of the main service. Further there is a single price for the combined services. The principal activity of the Applicant is supply of accommodation Services. While providing such services the charges are being realised in a consolidated manner for the value of food and other like services rendered. The Applicant has stated that they do not charge separately for the other services provided by them. Thus the services provided by the Applicant are composite in nature - As per Section 8 of the CGST Act 2017 for a Composite supply the tax rate on the principal supply will be treated as the tax rate on the given composite supply. Since the Applicant provides a number of services in a composite manner the hostel accommodation services provided by the Applicant being the principal supply which is taxable @18% will be tax rate for the composite supply provided by them.
Issues Involved:
1. Eligibility of hostel accommodation for GST exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate). 2. Requirement for GST registration for the applicant. 3. Taxability and applicable GST rate for hostel accommodation services. 4. Taxability of in-house food supply as part of a composite supply. 5. Scope of ruling under Section 97(2) of the GST Act. Detailed Analysis: 1. Eligibility for GST Exemption: The primary issue was whether the hostel accommodation provided by the applicant qualifies as a "residential dwelling for use as residence" under Entry 12 of Exemption Notification No. 12/2017-CT (Rate). The term "residential dwelling" is not defined in the CGST Act. However, it is generally understood to mean a place where people reside as a home, excluding temporary accommodations like hotels or hostels. The applicant's hostel provides temporary lodging with additional services, making it more akin to a commercial establishment than a residential dwelling. Thus, the services do not qualify for GST exemption under the said entry. The court emphasized that the exemption notification should be interpreted strictly, and the applicant failed to meet the conditions for exemption. 2. Requirement for GST Registration: Since the applicant's service of providing hostel accommodation is not exempt from GST, the applicant is required to register for GST if their aggregate turnover exceeds twenty lakh rupees in a financial year. This requirement is in accordance with Section 22 of the CGST Act, which mandates registration for suppliers of taxable services exceeding the threshold turnover. 3. Taxability and Applicable GST Rate: The supply of hostel accommodation services falls under Tariff heading 9963, classified under "Accommodation, food and beverage services." It is taxable at 9% CGST and 9% SGST under Sl.No. 7(vi) of Notification No. 11/2017, Central Tax (Rate), dated 28.06.2017, as amended. The court differentiated hostel services from hotel accommodation, noting that hostels, unlike hotels, are meant for longer stays and provide basic facilities. 4. Taxability of In-house Food Supply: The applicant provides in-house food as part of a composite supply along with accommodation services. A composite supply involves two or more naturally bundled services supplied together, where one is the principal supply. In this case, hostel accommodation is the principal supply, and the entire composite supply is taxable at the rate applicable to the principal supply, which is 18%. 5. Scope of Ruling under Section 97(2): The fifth question raised by the applicant was not addressed as it did not fall within the scope of Section 97(2) of the GST Act, which outlines the specific issues on which an advance ruling can be sought. Ruling: - The applicant's hostel accommodation services are not eligible for GST exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate). - The applicant must register for GST in Tamil Nadu if their turnover exceeds twenty lakh rupees. - Hostel accommodation services are taxable at 9% CGST + 9% SGST. - The supply of in-house food, being part of a composite supply with hostel accommodation, is taxable at 18%. - No ruling was issued for the fifth question as it fell outside the scope of Section 97(2) of the GST Act.
|
