2022 (6) TMI 697 - AAR - GST

Classification of services - Hostel Accommodation Charges per Hostel Seat provided by the Mody Education Foundation (MEF) to the students of Mody University of Science and Technology (MUST) having value of service upto Rs. 1000/- composite supply - charitable activities or not - Applicability of exemption under entry no. 14 of the notification no. 12/2017 dated 28-06-2017 - HELD THAT - In the present case, it is observed that the applicant will provide single service of 'hostel accommodation' for a single price of less that Rs. 1000/- per Hostel Seat. Being single taxable service, the supply is not a Mixed Supply under GST - supply of 'hostel accommodation service' by the applicant in the present matter is neither a composite supply nor a mixed supply. Rather it is a supply of 'residential or lodging service' at Hostel which would be provided to students of MUST. On gone through of exemption Entry No. 14 of the Notification No. 12/2017-CT (R) Dated 28.06.2017 as well as CBIC's Circular No. 32/06/2018-GST dated 12 February, 2018, it is found that the description of service is user based, meaning that, if the accommodation is used for residential or lodging purpose then it is immaterial who the user is. The said entry mentions Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes . The word 'hostel' not being specifically mentioned implies that the same would be covered under the term 'Whatever name called' - the scope of the entry is restricted to use of the accommodation unit for residential and lodging purpose only. The service of hostel is optional and not coming out from the package and separate consideration will be charged for providing such hostel facility to the students. In fact, the hostel fees are not a part of any package concerning commercial training coaching services rendered by the applicant. The Applicant is exclusively providing the Hostel Accommodation Service in isolation and no other service is clubbed or bundled along with the Hostel Accommodation Service. Thus, there is no question of Composite Supply u/s 2 (30) of the GST Act or Mixed Supply u/s 2(74) of the GST Act in the Case of the Applicant - Considering the provisions of Entry No. 14 of the Notification No. 12/2017-CT (R) Dated 28.06.2017 and clarification given by CBIC in Circular No. 32/06/2018-GST dated 12th February 2018, it is concluded that, the applicant's activity is satisfying the conditions of Entry No. 14 of said Notification No. 12/2017-CT (R) Dated 28.06.2017 and hence would be exempted from GST.

Summary

Issues Involved:
1. Classification of Hostel Accommodation Service.
2. Applicability of Notification No. 12/2017-CT (Rate) and Tax Liability on Hostel Accommodation Service.
3. Determination of the Value of Supply.
4. Clarification on 'Unit of Accommodation'.
5. Whether the Hostel Accommodation Service is provided independently or bundled with other services.
6. Eligibility for exemption under Entry No. 14 of Notification No. 12/2017-CT (Rate).

Detailed Analysis:

1. Classification of Hostel Accommodation Service:
The applicant, Mody Education Foundation (MEF), provides hostel accommodation services to students of Mody University of Science and Technology (MUST). The CBIC clarified in Circular No. 32/06/2018-GST that hostel accommodation services by trusts are exempt if the declared tariff is below Rs. 1000 per day, equating these services to those provided by hotels, inns, guest houses, etc., under Service Accounting Code (SAC) 9963.

2. Applicability of Notification No. 12/2017-CT (Rate) and Tax Liability on Hostel Accommodation Service:
The Notification No. 12/2017-CT (Rate) exempts services by a hotel, inn, guest house, club, or campsite for residential or lodging purposes with a declared tariff of a unit of accommodation below Rs. 1000 per day. The Rajasthan Appellate Authority for Advance Ruling (RAAAR) confirmed that a 'Hostel Seat' is considered a 'unit of accommodation,' making MEF's hostel accommodation services eligible for exemption under this notification.

3. Determination of the Value of Supply:
Section 15(1) of the GST Act defines the value of supply as the transaction value, which is the price actually paid or payable for the supply. MEF charges less than Rs. 1000 per day per hostel seat, making the service eligible for exemption.

4. Clarification on 'Unit of Accommodation':
The RAAAR ruled that in the case of MEF, a 'Hostel Seat' is the unit of accommodation, not a room or dormitory. This classification aligns with the general practice of charging per seat in hostels, inns, and dharmshalas, as opposed to per room in hotels.

5. Whether the Hostel Accommodation Service is provided independently or bundled with other services:
MEF provides hostel accommodation independently, without bundling it with other services like food and beverages. MUST handles all other services separately. Therefore, MEF's service does not constitute a composite or mixed supply under Sections 2(30) and 2(74) of the GST Act.

6. Eligibility for exemption under Entry No. 14 of Notification No. 12/2017-CT (Rate):
The service provided by MEF is classified under HSN 996322, which covers room or unit accommodation services provided by hostels. As the hostel accommodation charges are less than Rs. 1000 per day per hostel seat and are not bundled with other services, they fall under Entry No. 14 of Notification No. 12/2017-CT (Rate), making them exempt from GST.

Conclusion:
The Rajasthan Authority for Advance Ruling concluded that the hostel accommodation charges per hostel seat provided by MEF to the students of MUST, with a value of service up to Rs. 1000 per day, are eligible for exemption under Entry No. 14 of Notification No. 12/2017-CT (Rate). This ruling is based on the condition that the charges are solely for accommodation and do not include mixed supplies such as food and beverages.