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TMI Blog2023 (7) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... as per which it is a residential accommodation , but does not include hotel, motel, inn, guest house, camp-site, lodge, house boat, or like places meant for temporary stay. Therefore it could be inferred from the above that residential dwelling is a residential accommodation meant for permanent stay and does not include guest house, lodge or like places. In the instant case, the applicant in his own admission claims to be providing PG/hostel services which inter alia refer to paying guest accommodation/hostel services and are akin to guest house and lodging services and therefore can t be termed as residential dwelling . Further, it is also an admitted fact that the accommodation being provided by the applicant, out of the immovable property taken on rent and claimed as residential dwelling, does not have individual kitchen facility to each of the inhabitant and also cooking of food by inhabitants is not allowed, which is an essential characteristic for any permanent stay. On this count as well, the impugned accommodation being provided does not qualify to be a residential dwelling and thus the question of using the same as residence does not arise - the services being pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty @ 18% under RCM - GST on reverse charge will be applicable on the rental to be paid to the landowners by the applicant as the services of the applicant are leviable to GST and thus the applicant has to obtain GST registration. - DR. M.P. RAVI PRASAD AND SRI. KIRAN REDDY T, MEMBER Represented by Sri. B H Ramanatha Pai, C A Authorised Representative ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 AND UNDER SECTION 98(4) OF THE KGST ACT, 2017 M/s. Srisai Luxurious Stay LLP (hereinafter referred to as Applicant ), #19, Block A, CIL Layout, Sanjay Nagar, Bengaluru - 560 094, an unregistered person, have filed an application for Advance Ruling, vide user id 292300000597ARI, under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in form GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act, KGST Act. 2. The applicant is a Limited Liability Partnership (LLP) firm under the provisions of the LLP Act 2008, having registered office at #160, 5th Main, 4th Cross, NGEF Layout, Sanjay Nagar, Bengaluru-560094 and also having PAN number AEAFS6168R. They stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n issued for removal of entry number 14 of Notification No. 12/2017-Central Tax (Rate), which was relevant to the exemption of GST on the accommodation services, of charges up to Rs. 1,000/- per day, provided by hotels, clubs, campsites etc. and this removal comes into existence with effect from 18.07.2022. 6.2 Post this notification, the tax rate of 12% has been levied on renting of accommodation for hotel/inn/guesthouse etc. But the Hon'ble High Court of Karnataka in the case of Taghar Vasudev Ambarish Vs The Appellate Authority for Advance Ruling, Karnataka in W.P.No. 14891 of 2020 (T-Res) held that such private hostels are covered under the category of residential dwellings and as such covered under exemption vide entry number 12 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. PERSONAL HEARING PROCEEDINGS HELD ON 13.04.2023 7. Sri. Ramanatha Pai, Chartered Accountant Authorised Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application. FINDINGS DISCUSSION 8. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 12 Heading 9963 or Heading 9972 Services by way of renting of residential dwelling for use as residence [except where the residential dwelling is rented to a registered person]. [ Explanation . - For the purpose of exemption under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, - (i) the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and Heading 9963 or Heading 9972 (ii) such renting is on his own account and not that of the proprietorship concern.] NIL NIL 14 Heading 9963 Services by a hotel, inn, guest house, club or campsite, by whatever name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant claims to be taking a residential dwelling on rent and creates partitions and arranges cots which are then given on rent to inhabitants. Such partitioned rooms are shared by one or more un-related inhabitants. Applicant charges the inhabitants as per the number of people sharing the room. From the above it is apparent that the accommodation provided to the inhabitant is not a residential dwelling but a room; un-related people share the said room and invoices are raised per bed on monthly basis are not characteristic of a residential dwelling. It thus appears that the applicant is not providing service of renting of residential dwelling. 17. Further, it is also an admitted fact that the accommodation being provided by the applicant, out of the immovable property taken on rent and claimed as residential dwelling, does not have individual kitchen facility to each of the inhabitant and also cooking of food by inhabitants is not allowed, which is an essential characteristic for any permanent stay. On this count as well, the impugned accommodation being provided does not qualify to be a residential dwelling and thus the question of using the same as residence does not arise. 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the said additional services to be considered as bundled services along with the service of hostel/paying guest. The applicant did not provide the details of additional services, but provided the following list of ancillary services. They perhaps are referring these services only as allied additional services.- a. Meals which includes Breakfast, Lunch and Dinner. b. Fully furnished rooms c. Round the clock security guards at the premises d. House Keeping facilities. e. Washing Machine facilities f. Television in each room g. Internet facilities (WIFI available) h. Vehicle parking facilities. 22. The applicant intends to know whether the aforesaid services are naturally bundled with their main supply of hostel/paying guest service or not. Natural bundle has the characteristics where one of the services is the main service and the other services combined with such service are incidental or ancillary services which helps in better enjoyment of the main service. There are several other factors to determine if various services are naturally bundled or not- like if there is a single price for all the combined services or the combined ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered person, is liable to pay GST on rent on Residential property as per RCM Notification No. 13/2017 - CT(R) as amended vide Notification No.05/2022 - CT(R). The tax liability on the applicant s services of hostel/paying guest accommodation has been ruled at para 17 above and thus the applicant has to obtain GST registration and discharge the GST liability. Thus the applicant becomes a registered person and the RCM notification, as amended, is applicable to the applicant and hence they have to discharge the GST liability @ 18% under RCM, as discussed above. 25. In view of the foregoing, we pass the following RULING a) PG/Hostel Rent paid by inhabitants do not qualify for GST exemption under SI No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as the services provided by applicant are not akin to renting of residential dwelling for use as residence. b) The allied additional services provided by the LLP are not naturally bundled services with the applicant s Hostel/Paying guest accommodation service. c) GST on reverse charge will be applicable on the rental to be paid to the landowners by the applicant as the services of the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X
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