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TMI Blog2022 (5) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... optionally take snacks and F B as per their choice. In the present case, others services being provided by the Appellant are not naturally bundled or ancillary to Hostel service as the inhabitants of Hostel seats can avail these services from any other source. In fact the inhabitants have been restricted from sourcing these other services from any other person. Consequently, the inhabitants have to avail these services from the Appellant. In such situations, the other services are not ancillary to or bundled with the Hostel service. The word per unit of accommodation should be understood as per general practice adopted by large number of service provider in similar business model. In hotels, generally it fixes per room, per suit whereas in hostels, inns and dharmshalas, it fixes per room, per bed, per seat and per person. From the facts mentioned by the appellant, it would emerge that they provides accommodation service in hostel and fix the tariff on the basis of hostel seat, therefore the contention of appellant is agreed upon and it is found that hostel seat should be considered as a unit of accommodation. Appeal disposed off. - RAJ/AAAR/01/2021-22 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... everages) including Breakfast, Lunch and Dinner. Appellant will directly charge Boarding and Lodging Charges from the students of MUST . Boarding and Lodging charges shall be based on the type of Hostel Seat opted by the student of MUST . Following four categories of Hostel Seats are being offered by appellant for the students of MUST:- i) Hostel Seat in a Single Occupancy A.C. Room; ii) Hostel Seat in a Single Occupancy Non A.C. Room; iii) Hostel Seat in a Double Occupancy A. C. Room; iv) Hostel Seat in a Double Occupancy Non A.C. Room; 3.2 That Key Features of the Hostel Accommodation Service provided by appellant to students of MUST:- i) The principal service of Accommodation and ancillary service of serving Meals (Food Beverages) including Breakfast, Lunch and Dinner, shall be delivered as a single Package under Hostel Accommodation Service ; ii) The charges of Accommodation and Meals (F B) are inseparable; iii) The student will pay a single price or same amount, for the entire package, irrespective of the quantum or amount of each service in the package that they actually use or receive; iv) Accommodation and Meals (Breakf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered within the definition of charitable activities, CBIC has clarified at S. No. 1 of Circular No. 32/06/2018-GST dated 12-2-2018 as below:- TABLE 1 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. 12/2017-C.T. (Rate) refers] Thus, an analysis of the above clarification by the CBIC, makes the Hostel Accommodation Service at par with the Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l collection from the room shall be Rs.1500/- per night on full occupancy, but the same is considered as exempt under S. No. 14 of the Notification No. 12/2017 - CT (Tax) dated 28/06/2017; b) In case of Suit Room of a Hotel, comprising of 2 Rooms at a price of Rs.12000/- per night. The combined both rooms are considered as a Unit of Accommodation for application of Rate of GST @ 18% and the hotel is not permitted to split both rooms at Rs.6000/- per room night and reduce the Rate of GST @12%. c) In case of Airports, sleeping capsules (bunkers) are provided to passengers for resting for Rs.3000/- per night. There are total 10 sleeping capsules (bunkers) in the Room where this facility is offered. The GST is charged @ 12% for each sleeping capsule and not @ 18%, on the entire Room of Capsules assuming full occupancy. 6.1.5 The appellant submitted that due to nature and complication of the Hospitality Industry, the GST Council has specifically used the term Unit of Accommodation which reflects its intention to allow an assessee to provide services as per their own business model. If the intention would have been to charge GST on each Rooms basis, then there was no ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Taxation of Services: An Education Guide dated 20/06/2012. The relevant extract of the Education 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 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. . The appellant submitted that in the above illustration CBEC has clarified, that when Breakfast is provided as part of the room package, the same is considered as naturally bundled service of the Hotel in the ordinary course of business, therefore, when a Trust provides a Hostel Accommodation Service along with Meals (F B) including Breakfast, Lunch and Dinner to the students as part of the package, the same are naturally bundled with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example service of stay in a hotel is often combined with a service or laundering of 3-4 Items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. Having regard to the location and circumstances of the applicant, in order to provide the Hostel Accommodation Service - serving Meals (F B) including Breakfast, Lunch and Dinner to the students, is essential, without which the students cannot stay in the hostel. Thus, both the services are complementing and integral to each other. 4. Other Indicators:- a) There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. Yes - Students pay same amount (single price) irrespective of, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service provided by MEF to the students of MUST having value of service upto Rs.1000/- per day would be eligible for exemption under entry no. 14 of the notification 12/2017 CTR Dt 28-06-2017? Entry No. 14 of the Notification 12/2017 Central Tax (Rate) dated 28.06.2017, is produced verbatim:- SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) 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, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hostel Accommodation including Meals (F B) are advertised as a single package and there is no bifurcation of charges for Accommodation and Meals in the package. vi) MEF is offering the ancillary service of serving Meals (F B), exclusively to facilitate the main service of hostel accommodation and these ancillary services are otherwise not available separately for any other purpose. 6.4 The appellant placed reliance on the following, Advance Rulings in this matter:- (i) Srisai Luxurious Stay LLP (Karnataka AAR GST) Advance Ruling No. KAR ADRG 20/2020 dated 31/03/2020 (ii) M/s. Logic Management Training Institutes Pvt. Ltd. (Kerela AAR GST) Advance Ruling No. KER/76/2019 Dated 20.05.2020 (iii) M/s. Ramnath Bhimsen Charitable Trust (Chhattisgarh AAR GST) Order No. STC/AAR/ 11/2018 dated 02/03/2019 PERSONAL HEARING 7. A virtual hearing in the matter was held on 14.09.2021. Sh. Ritul Patwa, Authorized Representative of the appellant has attended hearing on 14.09.2021. They reiterated the submissions already made under grounds of appeal. During the course of the personal hearing, the members of the Appellate Authority directed the appellant to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that the Service provided by appellant to students of MUST is a mixed supply under section 2 (74) and not a composite supply under Section 2 (30). Further AAR has considered Room as a Unit of Accommodation for exemption upto Rs.1000/- per day and passed Ruling that the applicant would not be eligible for exemption under entry no. 14 of the Notification No. 12/2017 Central Tax (Rate), dated 28.06.2017. Aggrieved by the ruling the appellant filed present appeal before this forum. 8.4 Before examining the contention of the appellant it is imperative to go through the relevant provision of the CGST Act which defines the term Composite supply and Mixed supply. We find that as per Section 2(30) of CGST Act, 2017 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; Illustration . - Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore comfortable, the said ancillary services are availed by him. We find that the Rajasthan Authority for Advance Ruling has held that naturally bundled services are those services wherein one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. If current nature of supply of services is tested based on above factors, it can be ascertained that the provision of hostel accommodation could be a principal supply but ancillary service food cannot be said to arise naturally with the principal service of hostel accommodation and therefore are not bundled naturally with principal supply. We find that in the present case, others services being provided by the Appellant are not naturally bundled or ancillary to Hostel service as the inhabitants of Hostel seats can avail these services from any other source. In fact the inhabitants have been restricted from sourcing these other services from any other person. Consequently, the inhabitants have to avail these services from the Appellant. In such situations we are of the view that the other services are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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