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TMI Blog2022 (3) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... such as hostel accommodation, food etc. to the student of Rs. Less than 1000/- per day per student is not a Composite supply, hence, the services the applicant is supplying is Mixed Supply as per GST Act, 2017 and the applicable rate of tax is the highest rate applicable to the various services supplied by the applicant. The exemption to accommodation service is applicable in respect of a unit of accommodation where tariff is below ₹ 1000/- per day. Notification No. 11/2017-CT(Rate) as discussed provides applicable GST rate as per declared tariff of a unit of accommodation. Further, accommodation having declared tariff of a unit of accommodation of one thousand rupees and above but less than two thousand five hundred rupees per unit per day or equivalent, the GST rate will be charged 12%, further accommodation having declared tariff of a unit of accommodation of two thousand five hundred rupees and above but less than seven thousand five hundred rupees per unit per day or equivalent, the GST Rate will be charged 18%, further accommodation having declared tariff of a unit of accommodation of seven thousand five hundred rupees above per unit per day or equivalent, the GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices or both; (b) App ability of a notification issued under the provisions of this act, (c) Determination of time and value of supply of goods or services or both. (e) Determination of liability to pay tax on any goods or services or both, Further, the applicant being a registered person (GSTIN is 08AABTM0215E1Z5 as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT: 1. Mody Education Foundation, having its registered office at Kanchanjungha (7th Floor), 18- Barakhambha Road, New Delhi- 110001 (herein after referred as MEF) is Society registered under Societies Registration Act, 1860 with Registration No. S-10560/1986 (date of Registration - 27-02-1986). 2. The Mody Education Foundation was established with following objective- i. to provide for instruction and training in such branches of learning as it may deem fit. ii. to provide for research and for the advancement of and dissemination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. MEF has surplus infrastructure facilities after utilization thereof for its activities including running of school. This surplus infrastructure has been let out to MUST for use. The Infrastructure given to MUST for use includes Academic Buildings, certain Hostel Buildings, Office Buildings, Villas, and Dining hall. 6. MEF has been charging Rent from MUST for all above buildings and paying GST @ 18% on the same. 7. MUST is collecting Hostel fees from its students, which includes Lodging and Boarding in the Campus and GST is not charged being exempt under Sr. No. 66 of notification no. 12/2017 CTR Dated 28-06-2017 as amended. 8. University's Management is considering a proposal to discontinue use of Dining Hall facility and hostel building taken on rent as it is finding it difficult to maintain and operate them. Hence both the facilities shall be returned back to MEF. 9 Other Infrastructure facility such as University Academic Buildings and Villas where the faculties are residing etc. will continue to be used by MUST and It will pay rental charges to MEF and GST @ 18% on the same will be paid accordingly. 10. Hostel facility to the Students of MUST shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the same exemption entry. 16. The above understanding of the applicant is based on the guidance provided by the CBIC through its Education Guide dated 20.06.2012 issued in respect of erstwhile law. The relevant extract of the Guidance Guide is produced hereunder- 9.2.1 Services which are naturally bundled in the ordinary course of business The rule is - 'If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character' Illustrations- A hotel provides a 4-D/3-N package with the facility of breakfast. This is a natural bundling of services in the ordinary course of business. The service of hotel accommodation gives the bundle the essential character and would, therefore, be treated as service of providing hotel accommodation. A 5-star hotel is booked for a conference of 100 delegates on a lump sum package with the following facilities: Accommodation for the delegates Breakfast for the delegates. Tea and coffee during conference Access to fitness room for the delegates Availability of conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business are - There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. The elements are normally advertised as a package. The different elements are not available separately. The different elements are Integral to one overall supply - if one or more is removed, the nature of the supply would he affected. No straight jacket formula can he laid down to determine whether a service is naturally bundled in the ordinary course of business. Each case has to he individually examined in the backdrop of several factors some of which are outlined above. 17. From the reading of the education guide of the CBIC issued in respect of service tax, it can be comprehended that service which are naturally bundled shall be treated as single service based on the principle supply having dominance. 18. MEF is providing Hostel accommodation facility to the Students which consist of Lodging service alongwith Boarding facility which is a natural combination of service 19. It is pertinent here to discuss the Advance Ruling pronounce in the matter of IN RE SRISAI LUXURIOUS STAY LLP 2020 (36) G.S.T.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the additional services is less than ₹ 1000-00 per day per unit of accommodation. The Entry No. 14 of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 is verified and the description states that 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 or equivalent and these services should belong to Group 9963. The Group 9963 of the Service Accounting Codes as annexed to Notification No. 11/2017-Central Tax (Rate) relates those services which are coming under Food, Edible preparations, alcoholic and non-alcoholic beverages serving services, and if the additional services provided by the applicant belong to the Group 9963, then the turnover of these services will also be exempt as they are covered under the entry 14 of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017. But those services which are supplied independently to the clients which do not belong to the Group 9963 are liable to tax at appropriate rates, provided that the applicant is liable for registration. 20. The view of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t.) Condition 14 Heading 9963 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 or equivalent. Nil Nil Thus service of accommodation having declared tariff of a unit below one thousand rupees is charged at Nil rate in GST. Now, the point is that the accommodation services provided by Mody Education Foundation are bundle of lodging, boarding, food etc. services. This issue has been covered under Advance Ruling No. KAR ADRG 20/2020, Dated 31st March, 2020, wherein it has been ruled that-aIf the applicant charges additional charges for extra facilities opted by the inhabitants in addition to the facilities that are currently included in the tariff received by the inhabitants but the overall price would be less than the present exemption limit of ₹ 1,000-00 per day per unit, then the same is liable to tax at the rates applicable to them as they are independent supplies, if they do not belong to the Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply' as under:- composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; We find that essential components of a composite supply are as under- two or more taxable supplies; services should be naturally bundled; supplied in ordinary course of business; one of the supply out of whole should be a principal supply. 5. Since, bundling/Naturally bundled service has not been defined in GST law, hence, reference can be taken from CBEC Education Guide issued in 2012 after introduction of negative list in erstwhile Service Tax regime when concept of bundling was introduced for the first time. The relevant extracts of the Guide are reproduced below: - Bundled service' means a bundle of provision of various services where in an element of provision of one service is combined with an element or elements of provision of any other service or services. An example of 'bundled service&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration .- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately; Further, tax liability on a mixed supply shall be determined as defined in Section 8 (b) of GST Act, 2017 which is as under- a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. 8. We observe that the services supplied by the applicant such as hostel accommodation, food etc. to the student of Rs. Less than 1000/- per day per student is not a Composite supply, hence, the services the applicant is supplying is Mixed Supply as per GST Act, 2017 and the applicable rate of tax is the highest rate applicable to the various services supplied by the applicant. To ascertain rate of GST on Mixed Supply, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year. 9 - (v) Supply, by way of or as part of any service or in any other manner whatsoever in outdoor catering wherein goods, being food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), as a part of such outdoor catering and such supply or service is for cash, deferred payment or other valuable consideration. 9 - (vi) Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of a unit of accommodation of two thousand five hundred rupees and above but less than seven thousand five hundred rupees per unit per day or equivalent. Explanation.- declared tariff includes charges for all amenities pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent. Nil Nil The same is also clarified vide CBIC Circular No. 32/06/2018-GST dated 12th February, 2018. The relevant portion is as below- S.No. Issue Clarification 1. Is hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus, exempt under SI. No. 1 of notification No. 12/2017-C.T. (Rate)? Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of notification No. 12/2017-C.T. (Rate). However, 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 or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. [SI. No. 14 of notification No. 12/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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