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TMI Blog2019 (3) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... for use of hostel rooms given by us for residential purposes but ultimately been used by the hirer for commercial use? - Held that:- As per the clarification issued vide Circular No. 32/06/2018-GST dated 12th February 2018, that the distinction between services by a hotel, inn guest house club or composite, by whatever name called, for residential or lodging purposes and Hostel accommodation services is done away. In the present case applicant submits that during the vacation period hostel is offered for residential purpose and hired for labourers of a commercial organization - the description of service is use based, meaning that if the accommodation is used for residential or lodging purpose then it is immaterial who the user is. 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. Whether the said notification would be applicable if the accommodation if decided to be given for commercial purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uling, a reference to such a similar provision under the CGST Act /MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim , could be seen thus- FACTS RELATING TO TRANSACTION MADE BY TRUST 1. How old the trust is? STUDENTS WELFARE ASSOCIATION is 63 years old registered charitable Trust having Section 12AA 80G certificate of exemption under Income Tax 1961 since 1973. Trust activity, is exclusively connected with students and education. 2. Whose children are admitted in the Hostel? We work solely for the benefit of students from poor families from economical backward class from rural areas who come to Pune for college education. They are so poor that they cannot afford the fees of college hostels or private commercial hostels. The students include both-boys and girls - as also those who are physically handicapped (Blind, Deaf, Polio affected), orphan, single parent and children of farm labours, poor farmers, drought affected area, bricks workers, sugar cane workers, students from tribal community, etc. 3. Capacity of the Hostels: SWA provides support to 750 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of education and personality development of the students free of cost as fees charged are inclusive of these services as well. (a) Daily morning Yogasanas and Sports activities (b) Training in conversational English and foreign languages (c) Training in Computer courses (d) Arrange lectures on personality development and Entrepreneurship development. Following is the number and categories of other students staying in hostel 2018-19 S.No. Category Boys Girls Total 1. Blind 3 2 5 2. Handicapped 1 0 1 3. Single Parent (No Father) 35 20 55 4. Orphan 4 2 6 5. Drought prone area (Marathawada Vidarbha) 187 49 236 6. BPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re managed by volunteers who work on honorary basis and a skeleton staff. SWA helps these students for their complete development as a responsible citizen of our country. 7. Conclusion STUDENT WELFARE ASSOCIATION is not a commercial hostel or commercial organization. The trust, meets its expenses by charging aforesaid nominal fee to the students and from donations collected from the public. We hope donations received will not be chargeable to GST. May this also be clarified? Additional submissions given by the Applicant --- We have attended the Preliminary Hearing at GST - Office Mazgaon on 21 August 2018. As per our discussion we have been asked to submit our say regarding the continuation of the application. In this regard we have to inform you that the management is in favour of continuing the same application as controversy persists in the matter in Pune as different consultants are opining differently and hence your opinion would be of immense benefit to the Trust. In this connection we have to state as under: We offer lodging and boarding facilities besides compulsory personality development training which includes computer awareness activities besides dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or ruling on the ground that a circular cannot override notification and hence the query. Secondly, during vacation period the hostel is offered to others for accommodation purpose. Though the accommodation is occupied for residential purpose, sometimes it is hired for labourers of a commercial organization. The tariff charged is much less than rupees one thousand per day. We would like to know whether different treatment would be required for use of hostel rooms given by us for residential purposes but ultimately been used by the hirer for commercial use. The words used in notification are that if the accommodation is used for residential or lodging purposes which words do not cover for commercial purposes, and hence we would like to have your ruling on whether the said notification would be applicable if the accommodation if decided to be given for commercial purposes in future whether the activity still would be able to enjoy exemption under said notification.. Thirdly, the activity carried by the trust is bound to result into incurring financial losses. The recoupment of these sums of expenditure which causes financial loss to the trust is made good out through donations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managed by the students and there is very limited staff of trust. II) Clarification asked for by Students Welfare Association: 1) Circular No. 354/17/2018-TRU dated 12.02.2018 in which clarification on hostel accommodation is issued. It is treated at par with accommodation of hotel inns, guest house, etc., and accordingly chargeable @ 18%. However, it is exempt vide Exemption Notification No. 12/2017-CT(Rate-vide Entry No.14 where services by a hotel, inn, guest house, club, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent. Ans - Vide Circular No: 32/06/2018 (F.No.354/17P018-TRU), dated 12.02.2018, on the issue of hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus exempt under S.No.1 of Notification No.12/2017-CT.(Rate), it has been clarified that Hostel accommodation services do not fall within the ambit of charitable activities as defined in Para 2(r) of Notification No.12/2017-CT(Rate). However services by a hotel, inn, guest house, club or campsite by whatever name called, for residential or lodging purpose, having d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. Kalpana Dabhade, C.A. appeared and made oral and written submissions for admission of application. Jurisdictional Officer Ms. Sumangla Sharma, Asstt. Commr. of CGST, Division-I (Shivaji Nagar) Pune II Commissionerate, appeared and made written and oral submissions and brought to notice of this authority the circular No. 32/06/2018-GST dated 12th February, 2018 wherein there is specific clarification that accommodation service in hostels including by trusts having declared tariff below one thousand rupees per day is exempt from payment of GST. She was also of view the services by the applicant would be exempt from GST as the tariff per day is much lesser than ₹ 1000/- per day as clarified in circular. The applicant was requested to re-examine his application in view of the circular referred above and intimate this authority within a week in writing, if they want to continue with their application or intend to withdraw the same in view of above circular. The applicant has submitted his contentions in writing and final hearing in the matter was held on 12.12.2018 Sh. Dilip V. Sarbhai, C.A. along with Sh. Prabhakar Patil CEO and Ms. Kalpana Dabhade, C.A. appeared and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities it is the submission of applicant that activities are covered by the expression Charitable activities as defined in the notification under the GST law. It is therefore necessary for us to examine the relevant entry at Sr.no. 1 of notification No. 12/2017-CT (Rate) dt 28.6.2017 for the purpose of applicability of the notification to the activities undertaken by the applicant as charitable activities and same is reproduced as below, Notification No. 12/2017-Central Tax (Rate). Sl.no. Chapter, Section, Heading, Group of Service code (Tariff) Description of Services Rate (per cent.) Condition 1 Chapter 99 Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities. Nil Nil The definition of charitable activities is as below: 2 (r) Charitable activities means activities relating to - (i) public health by way of,- (A) care of counseling of (I) terminally ill persons or persons with severe p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) refers] In view of this clarification we hold that hostel accommodation provided by Trusts to students is not covered by exemption Notification Entry No.1 of Notification No. 12/2017-CT (Rate). Question-2. Whether different treatment would be required for use of hostel rooms given by us for residential purposes but ultimately been used by the hirer for commercial use. As per the clarification issued vide Circular No. 32/06/2018-GST dated 12th February 2018, that the distinction between services by a hotel, inn guest house club or composite, by whatever name called, for residential or lodging purposes and Hostel accommodation services is done away. In the present case applicant submits that during the vacation period hostel is offered for residential purpose and hired for labourers of a commercial organization, We may now refer to entry Sr. No. 14 of the Notification no. 12/2017 to ascertain whether different treatment would be required for use of hostel rooms given for residential purposes and commercial purposes. Sr. No. 14 Sr. No. Chapter, Section, Heading, Group or Service Code (Tariff) De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards any supply and chargeable to GST. The term consideration has been defined under the GST Act, as below: 2(31) - (31) Consideration in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; The concept of income by a charitable Trusts from donations collected from the public has been explained by the Board vide GST Flyers dated 01/01/2018 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are answered thus - Question -1(a). Whether hostel accommodation provided by Trusts to students is covered within the definition of Charitable Activities and thus, exempt under Sl. No. 1 of notification No.12/2017-CT (Rate)? Question -1(b). Whether the supply of residential or lodging services @ ₹ 22,250/- per annum is covered by Sr. No. 14 of Notification No. 12/2017-CT (Rate)? Answer- 1(a) Answered in the negative. 1(b) Answered in the affirmative. Question -2. Whether different treatment would be required for use of hostel rooms given by us for residential purposes but ultimately been used by the hirer for commercial use. Answer-- Answered is in negative Question -3. Whether the said notification would be applicable if the accommodation if decided to be given for commercial purposes in future whether the activity still would be able to enjoy exemption under said notification. Answer- Not answered in view of answers to Que. (1) and (2) above. Question 4. Whether the large donations given by the donors would be treated as service and taxed accordingly and whether only sponsored donations are believed to be covered under said m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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