2020 (7) TMI 255 - AAR - GST

Interpretation of Statute - Renting of accommodation services - meaning of Per Unit as specified under Chapter Section or Heading-9963 under entry no. 7 of the Notification No. 11/2017-Central Tax (Rate) dated 28 June 2017. HELD THAT - As per the submissions made by the applicant, that they are treating the entire Villa as one unit and therefore will give the same on rent to only one customer for any particular given date. In other words two different clients will not be able to book the same Villa for the same period i.e. if the particular Villa is booked by one client at a given date then another client will not able to book the same Villa on the same day - the applicant has no intention to rent out the rooms inside the Villa, individually and therefore there is no question of the individual rooms being treated as per unit as per the above said Notification. The applicant s representative, during the course of the hearing also admitted that, since they will be rending out the entire Villa, then each individual Villa may be treated as per unit . The pattern of renting in relation to usage of the property provides the context or perspective in determination of unit of accommodation. In a hotel, a room constitutes a unit whereas in a hostel, a bed may constitute a unit , as tariff is also declared accordingly. In the present case the applicant, themselves have mentioned that, rent is proposed to be offered to clients on per day basis for entire villa. The two different clients will not be able to book the same villa and there will be no option of booking particular room of the villa. Interested clients need to book the entire villa. Thus, it is crystal clear that villa per say is indivisible unit in applicant s business parlance, and the declared tariff is only for the villa as a whole. Hence, the expression per unit in the present case will be the entire villa.

Summary

Issues Involved:
1. Interpretation of the term "Per Unit" under Chapter Section or Heading-9963 of Notification No. 11/2017-Central Tax (Rate) dated 28 June 2017.

Analysis:

Issue 1: Interpretation of "Per Unit" under Notification No. 11/2017-Central Tax (Rate)

The applicant, engaged in renting luxurious villas, sought clarification on whether the term "Per Unit" refers to the entire villa or individual rooms within the villa for the purpose of determining the GST rate. The applicant contended that the villa should be considered a unit, as only one client can book the entire villa at a time. The jurisdictional officer supported this view, emphasizing that the context of renting and the declared tariff should guide the interpretation. The Advance Ruling Authority examined the facts and submissions, concluding that the entire villa would be treated as "per unit" under the notification. This decision was based on the applicant's rental model, where the villa was indivisible and rented as a whole to a single client, precluding the booking of individual rooms. The authority distinguished previous judgments related to hotel rooms and hostel beds, as they were not directly applicable to the current scenario. The ruling emphasized the importance of the rental pattern in defining the unit of accommodation, affirming that the villa, in this case, constituted the "per unit."

In conclusion, the Advance Ruling Authority clarified that for the applicant's business of renting out entire luxurious villas, the entire villa would be considered the "per unit" under Entry no. 7 of Notification No. 11/2017-Central Tax (Rate) dated 28 June 2017. The ruling highlighted the unique rental model where the villa was rented as a whole to a single client, aligning with the context and perspective of the rental activity. The decision was based on the specific circumstances of the applicant's business, emphasizing the indivisibility of the villa and the absence of individual room bookings, leading to the entire villa being treated as the unit for GST rate determination.