2021 (8) TMI 1230 - AAR - GST

Exemption from GST or not - activity of providing the hostel on the rent to various students by applicant - hostel fees charged per student per day is much less than ₹ 1000/- - exemption under Serial Number 12 or Serial Number 14 of Notification No. 12/2017- Central Tax (Rate) (as amended time to time) dated 28/06/2017? - HELD THAT - The word hostel not being specifically mentioned implies that the same would be covered under the term Whatever name called . The services provided by such hostel, for residential and lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of an accommodation is below one thousand rupees per day. Therefore, the scope of the entry is restricted to use of the accommodation unit for residential and lodging purpose only. The applicant is providing hostel on the rent to various students where fees charged per student per day per room is much less than ₹ 1000/- per day per person. Therefore, considering the provisions of notification Entry No. 14, and clarification given by CBIC in circular No. 32106/2018-GST dated 12th February 2018, it is held that, the applicant s activity is satisfying the conditions of Entry Sr.no. 14 of said Notification and hence would be exempt from taxes.

Summary

Issues Involved:
1. Whether the activity of providing hostel accommodation to students is exempt from GST.
2. If exempt, whether the exemption falls under Serial Number 12 or Serial Number 14 of Notification No. 12/2017-Central Tax (Rate).

Issue-Wise Detailed Analysis:

1. Exemption of Hostel Accommodation from GST:
The applicant, M/s. Ghodawat Eduserve LLP, provides hostel facilities to students at a nominal fee of ?34,000 per year, which is approximately ?95 per day. The applicant contends that this service should be exempt under GST Notification No. 12/2017-Central Tax (Rate).

The term "residential dwelling" is not defined in the GST Act. The applicant interprets "residential dwelling" to include hostels, based on common parlance and judicial interpretations, arguing that hostels provide long-term residential accommodation similar to residential dwellings.

The concerned officer argues that hostel facilities, unlike residential dwellings, are temporary and exclusive to students of the educational institution, lacking the permanence and amenities (like kitchens) typical of residential dwellings.

2. Applicability of Serial Number 12 or Serial Number 14 of Notification No. 12/2017-Central Tax (Rate):
The applicant asserts that the hostel services should be exempt under Serial Number 12, which exempts "Services by way of renting of residential dwelling for use as residence." They argue that hostels fit within the definition of residential dwellings and thus should qualify for this exemption.

The concerned officer, however, contends that hostels do not meet the criteria for residential dwellings as they are meant for temporary student accommodation and do not provide the same rights and amenities as residential dwellings.

The Authority for Advance Ruling (AAR) examined both Serial Number 12 and Serial Number 14 of the notification. Serial Number 14 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 AAR concluded that the hostel accommodation provided by the applicant does not qualify as a "residential dwelling" under Serial Number 12 due to its temporary nature and restrictions on use. Instead, it falls under Serial Number 14, as the hostel provides lodging services at a rate below ?1000 per day.

Conclusion:
The AAR ruled that the activity of providing hostel accommodation to students by the applicant is exempt from GST under Serial Number 14 of Notification No. 12/2017-Central Tax (Rate), as it meets the criteria of providing lodging services below ?1000 per day. The exemption under Serial Number 12 is not applicable in this case.