2022 (3) TMI 1301 - AAAR - GST

Classification of goods - applicable GST SAC code - rate of GST - boarding, lodging facilities and such other services - composite supply or a mixed supply? - principal supply or not - baturaaly bundled services - exemption vide N/N. 12/2017- CT (Rate) dated 28.06.2017 - HELD THAT - It is not in dispute that AMSL run the program under the DDU-GKY project, wherein the Boarding and Lodging facilities are to be extended by them to the students enrolled in the program. AMSL has engaged the applicant to provide the 'Hospitality services' and entered into an agreement with the applicant. It is evident from the said agreement between the applicant and AMSL that the supply is made by them in the capacity of an 'independent contractor' and therefore the supply is not a 'business service of intermediaries'. In the case at hand, the applicant undertakes the activities of providing 'Hospitality Services' specifically classifiable under SAC 99632, in his individual capacity and therefore, the activity cannot be categorized as 'Other business support services not elsewhere classified.' In the case at hand, the applicant has entered into lease agreements with third party service providers and in one such agreement entered into with AMET University( Academy of Maritime Education and Training) available on record, it is seen that the applicant has entered into the contract for lease of the property owned by AMET for the purpose of 'running Hostels and providing accommodation for the students/Candidates, and/or general office purposes and lawful uses ancillary to any of the foregoing principle uses'. Thus, it is clear that the applicant, enters into agreement with third parties, in their own capacity, to enable themselves to provide the 'Hospitality service', which establishes that the activities of the applicant are independent in nature - Also, from the scope, language and the terms and conditions of the agreement of the applicant with AMSL, it is evident that the applicant is entrusted to provide the 'Hospitality Services' in the capacity of an Independent contractor only and not as an agent of AMSL. The scope, language and the terms of the agreement establishes that the applicant is to extend the bouquet of services required from them as 'Hospitality Services' together and in conjunction with each other and therefore is a naturally bundled 'composite supply' of service, with 'Provision of accommodation' as the principal service. Whether the service is exempted under S.No. 14 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017? - HELD THAT - In the case at hand as has been observed, the per day equivalent consideration for the composite supply of Hospitality services when extended in Chennai Region is ₹ 300/- and for regions out of Chennai the per day equivalent consideration is ₹ 250/- which are below one thousand rupees stipulated for per day. Therefore, the applicant is eligible for the said exemption entry.

Summary

Issues Involved:
1. Classification of the services provided by the appellant to AMSL.
2. Determination of whether the services constitute a composite supply or a mixed supply.
3. Applicability of exemption under Notification No. 12/2017-CT (Rate) dated 28.06.2017.

Detailed Analysis:

1. Classification of Services:
The appellant, engaged in providing hospitality services to AMSL, sought clarification on the applicable GST SAC code and rate for their services. The original authority had differing views on the classification:
- SGST Member's View: The services were classified as "business support services" under SAC Code 998599, taxable at 9% CGST and 9% SGST. The SGST Member argued that the appellant was merely supporting AMSL in implementing the DDU-GKY project, and hence, the services were classified under "other support services."
- CGST Member's View: The CGST Member disagreed, stating that the appellant provided hospitality services, including boarding and lodging, directly to AMSL. The services were not just supportive but were part of a composite supply of hospitality services, classifiable under SAC 9963.

2. Composite Supply vs. Mixed Supply:
- SGST Member's View: The SGST Member did not explicitly address whether the services were a composite or mixed supply, focusing instead on the classification under business support services.
- CGST Member's View: The CGST Member considered the services a composite supply, where the provision of accommodation was the principal supply. The services were naturally bundled and supplied in conjunction, making them a composite supply under GST law.

3. Applicability of Exemption under Notification No. 12/2017-CT (Rate):
- SGST Member's View: The SGST Member did not address the exemption applicability due to the classification under business support services.
- CGST Member's View: The CGST Member opined that the composite supply of hospitality services, with accommodation as the principal supply, qualified for exemption under SI.No. 14 of Notification No. 12/2017-CT (Rate), as the per day equivalent tariff was below ?1000.

Appellate Authority's Decision:
The Appellate Authority analyzed the submissions and agreements between the appellant and AMSL, concluding as follows:
- The appellant provided hospitality services independently and not as an intermediary or agent of AMSL.
- The services constituted a composite supply with the provision of accommodation as the principal supply.
- The per day equivalent tariff for the accommodation was below ?1000, making the services eligible for exemption under SI.No. 14 of Notification No. 12/2017-CT (Rate).

Ruling:
a. The supply envisaged in the agreement with AMSL is a composite supply with "Provision of Accommodation-SAC 9963" as the principal supply.
b. The exemption at SI.No. 14 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 is applicable to the case in hand.