2021 (12) TMI 720 - AAR - GST

Classification of services - hospitality industry services - applicable GST SAC and GST rate - composite supply or a mixed supply - naturally bundled services or not - service exempt vide Notification No.12/ 2017-CT (Rate) dated 28-06-2017 - HELD THAT - The applicant is providing boarding and lodging facilities and other services which are taxable under CGST Act 2017. The applicant has submitted few sample invoices raised by him towards the services provided by him to AMSL, which shows that he is raising 2 separate invoices, one towards hostel rent and one towards hostel food. Also from the agreement it is seen that the charges are defined separately for accommodation and for food and other facilities. Since the Applicant is raising separate invoices for the services supplied by him to AMSL, there is no provision of 'bundled services to AMSL by the applicant, but two separate supply of services. Since there is no provision of 'bundled services' by the applicant to AMSL, the same is not covered under the definition of 'composite supply.' Since the consideration received by the applicant is for providing boarding, lodging facilities and such other agreed services, the same may be considered as 'declared tariff as per Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. The service of supply of food provided by the applicant is also covered under the above entry of the and hence attracts GST at 5%.

Summary

Issues Involved:
1. Applicable GST SAC and GST rate for the supply of service.
2. Determination of whether the service is a composite supply or a mixed supply.
3. Exemption status under Notification No.12/2017-CT (Rate) dated 28-06-2017.

Issue-wise Detailed Analysis:

1. Applicable GST SAC and GST Rate for the Supply of Service:
The applicant, engaged in providing boarding, lodging, and other services to AMSL, sought clarity on the applicable GST SAC and rate. The ruling determined that the applicable GST SAC for the described services is 9963. The accommodation service (SAC 99632) provided by the applicant to AMSL is exempted from GST as per Notification No.12/2017-CT (Rate) dated 28-06-2017, since the declared tariff of a unit of accommodation is below one thousand rupees. However, the supply of food service (SAC 99633) attracts GST at 5% as per Sl.No. 7(ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 13/2018-Central Tax (Rate) dated 26.07.2018.

2. Composite Supply or Mixed Supply:
The applicant questioned whether their services constituted a composite supply or a mixed supply. The ruling clarified that the services provided by the applicant do not constitute a composite supply. Composite supply, as defined under Section 2(30) of the CGST Act, 2017, involves two or more taxable supplies that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one being a principal supply. The applicant's services were not considered naturally bundled, as separate invoices were raised for accommodation and food services. Therefore, the services do not meet the criteria for composite supply.

Similarly, the services provided by the applicant do not constitute a mixed supply. Mixed supply, as defined under Section 2(74) of the CGST Act, 2017, involves two or more individual supplies made in conjunction with each other for a single price, which does not constitute a composite supply. Since the applicant provides two separate services for different prices, the services do not meet the criteria for mixed supply.

3. Exemption Status under Notification No.12/2017-CT (Rate) dated 28-06-2017:
The applicant sought clarity on whether their service is exempted under Notification No.12/2017-CT (Rate) dated 28-06-2017. The ruling confirmed that the accommodation service provided by the applicant is exempted under this notification, as the declared tariff of a unit of accommodation is below one thousand rupees per day. However, the supply of food service is taxable at 5% GST as per the relevant notifications.

Conclusion:
The ruling provided a clear classification and tax treatment for the services provided by the applicant. The applicable GST SAC for the services is 9963. The services do not constitute either a composite supply or a mixed supply but are considered two separate supplies. The accommodation service is exempt from GST, while the food service attracts GST at 5%.