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TMI Blog2024 (8) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... nts during vacation period - HELD THAT:- The Supply of hostel accommodation services to students with mandatory supply of meals and other necessary amenities, for duration of stay of 1 to 2 months during vacation period to new students, is not eligible for benefits of exemption as per Entry at Sr No 3 of notification No 12/2017-Central tax (Rate) dated 28 June 2017. Hostel accommodation services provided by the Applicant for duration of stay of one or two months to old students during vacation period - HELD THAT:- The earlier tenure of residence of 10 months is extended for further period of one month or 2 months by the old student will not change the nature of their earlier stay of 10 months (Residence) to temporary accommodation status hence, such supplies considering the earlier tenure 10 months will also be long term tenure and are considered as residence and eligible for benefits of exemption as per Entry at Sr No 3 of notification No. 12/2017-Central tax (Rate) dated 28 June 2017. - SHRI. AJAYKUMAR V. BONDE AND MS. PRIYA JADHAV, MEMBER PROCEEDINGS (UNDER SECTION 98 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND THE MAHARASHTRA GOODS AND SERVICES TAX ACT, 2017) The pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monsoon season. 1.5 The students admitted in the Hostel are required to follow the rules and regulations of the Hostel, such as the following:- Prescribed application form has to be filled up online; Payment of fees has to be made by DD/Cheque/NEFT; At the time of admission, the students will be interviewed in the presence of the parent s local guardians with all necessary documents, such as mark list, leaving/transfer certificate, college fees receipt, bank payment details; Medical Certificate should be produced in original; Students are expected to return to their room by 10:30 pm on weekdays and by 12:00 am on Sunday; Only vegetarian food will be served in the mess of the hostel; Timings for the meals will be as follows:- Breakfast 7:00 am to 8:30 am; Lunch 10:00 am to 1:00 pm; and Dinner 7:30 pm to 9:30 pm; Students going to their native place /some other places should submit leave applications to the rector before going; All students must adhere to the timings of the mess; Students will stay in the rooms allotted to them and not change the rooms without the permission of the rector; Students should clean their rooms daily along with furniture; Students should keep bathrooms an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption under Serial Number 12 of Notification 12/2017-Central Tax (Rate), dated 28th June 2017. 2.1 Conditions for applicability of entry at Serial Number 12 are as under, 2.1.1 The Applicant wishes to invite your attention towards Serial Number 12 of Notification 12/2017-Central Tax (Rate) dated 28th June, 2017 (hereinafter referred to as Exemption Notification ), wherein the exemption is provided in respect of the services provided by way of renting of residential dwelling for use as residence. The extract of the same is reproduced hereunder: Sr.No. Chapter, Section, Heading, Group or Services Code (Tariff) Description of Services Rate (Present) Condition 12 Heading 9963 or Heading 9972 Services by way of renting of residential dwelling for use as residence. Nil Nil Further, similar exemption entry is there at Serial Number 13 of the Notification 9/2017-Integrated Tax (Rate) dated 28th June 2017. 2.1.3 Based on the above, it is clearly evident that the following conditions are required to be satisfied for a service to be covered under the above entry:- 1. The service under question must be a renting service; 2. The property so let out must be a residential dwelling; and 3. Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s important to understand the meaning of the term principal supply and taxable supply . The same has been reproduced below:- Section-2(90) principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary Section-2 (108)- taxable supply means a supply of goods or services or both which is leviable to tax under this Act; 2.2.5 In addition to the above, reference is drawn to Section 8 of the CGST Act, 2017 that deals with the determination of tax liability on composite supplies. The same has been reproduced below for your ease of reference:- The tax liability on composite or a mixed supply shall be determined in the following manner, namely (a) composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply 2.2. 6 On a conjoint reading of all the provisions mentioned above, the Applicant wishes to submit the following:- The supply of hostel accommodation, mess facility, facilities in the room, hot water facility and other facilities provided by the Applicant are leviable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, as per the Oxford dictionary, the term means a house or an apartment or other places of residence or a place to live in or building or other places to live in . Similarly, as per the Webster dictionary, it means a shelter (as a house) in which people live . 2.3.3 Based on the interpretation of the above definitions, it is evident that the expression residence and dwelling have more or less the connotation in common parlance and therefore, no different meaning can be assigned to the expression residential dwelling . Thus, it cannot be held that the same does not include hostels which is used for residential purposes by students. 2.2.4 Further, reference is also drawn to the definition of such term provided in Para 4.13.1 of Taxation of Services: An Education Guide dated 20 June 2012 issued by the Central Board of Indirect Taxes ( CBIC) under the Service Tax regime. The relevant extract of the same is reproduced below:- 4.13.1 What is a residential dwelling? The phrase residential dwelling has not been defined in the Act. It has therefore to be interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm. Such hostel thus becomes a place of permanent residence or a second home for those students. Considering that there is an element of permanency involved in this case, the hostel facility provided by the Applicant to the students cannot be termed as a temporary stay. Further, hotels, motels, inns, etc. have tariffs declared for per day basis. However, in case of hostels, there is no concept of declared tariffs. Instead, there are charges for accommodation services that are recovered from the students on a monthly or a package basis. 2.3.7 Basis above, it can be concluded that the hostels where the students are accommodated for the academic year or on need basis depending upon their exams or educational courses qualify to be a residential dwelling. Thus, the second condition required to be satisfied for the applicability of Serial Number 12 of the Exemption Notification is satisfied in the case of the Applicant. 2.4 The hostel accommodation provided by the Applicant is used by the students for the purpose of residence: 2.4.1 The term residence is not defined under the CGST Act, 2017. Thus, the Appellant wishes to refer to the decision given by the Hon ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything to the contrary in the Act, binds the Respondent It is well settled that when the word is not defined in the Act itself, it is permissible to refer to the dictionaries to find out the general sense in which the word is understood in common parlance Court relied on Dictionary meaning of expressions residence and dwelling to hold that no different meaning can be assigned to the expression residential dwelling and it cannot be held that the same does not include hostel which used for residential purposes by students or working women Similarly, the finding recorded by AAAR that the hostel accommodation is more akin to sociable accommodation is unintelligible and is not relevant for the purposes of determining the eligibility of the petitioner to claim the benefit under the exemption notification. The order dated 31.08.2020 passed by the AAAR Karnataka is quashed and it is held that the service of leasing out residential premises as hostel to students and working professionals is covered under Entry 13 of IGST Notification No.9/2017 dated 28.09.2017 namely Services by way of renting of residential dwelling for use as residence In view of the above submissions, the Applicant co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation services provided by the Applicant would be eligible for exemption under Serial Number 12 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017? Hereinafter the exemption at Sr No 12 of the Notification No 12/2017-Central Tax (Rate) dated 28th June 2017 are referred as the said entry and the Notification as the Exemption Notification . Based on the duration of stay the supply of services can be divided in to three broad categories: 1. Duration of stay of 10 months. 2. Duration of stay of one to two months during the vacation periods to new Students. 3. Duration of stay of one to two months during the vacation periods for old students who have already stayed in hostel for duration of 10 months. Therefore, the question raised by the applicant is trifurcated in to 3 parts depending on the aforesaid duration of stay and its combinations and such 3 reframed questions are answered. In support of this application the applicant has relied on judgment of two non-jurisdictional High Courts namely (i) Hon High Court of Karnataka, in case of TAGHAR VASU DEVA AMBRISH versus Appellate Authority for Advance Ruling, Karnataka and others in W.P. No. 14891 of 2020 (T-RES) decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 and under the identical Notification under the TNGST Act, 2017, and also under Entry 13 of Exemption Notification No. 09/2017-IT(Rate) dated 28.06.2017, as amended Question (3) Whether any specific tariff entry is applicable to hostels under the tariff Notification, in the event of requirement of registration? Answer : The supply of services by way of providing hostel accommodation falls under Tariff heading 9963 and is taxable @ 9% CGST + 9% SGST under SI. No. 7(vi) of the Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017, as amended vide Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019. Question (4) Whether, in the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply? Answer : The activity of supply of inhouse food to the inmates of the hostel amounts to providing services in a composite manner and the hostel accommodation services provided by the Applicant, being the principal supply, which is taxable @18%, is the tax rate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooms, are using the premises as their residential dwelling or commercial purpose since renting of residential unit attracts GST only when it is rented for commercial purpose. So, in order to claim exemption of GST, the nature of the end-use should be residential and it cannot be decided by the nature of the property or the nature of the business of the service provider, but by the purpose for which it is used i.e. resident dwelling which is exempted from GST. Therefore, this Court is of the considered view that the issue of levy of GST on residential accommodation should be viewed from the perspective of recipient of service and not from the perspective of service provider, who offers the premises on rental basis. 64. In the light of the above discussion, it is clear that the renting out the hostel rooms to the girl students and working women by the petitioners is exclusively for residential purpose, this Court is of the considered view that the condition prescribed in the Notification in order to claim exemption, viz., residential dwelling for use as residence has been fulfilled by the petitioners and thus the said services are covered under Entry Nos. 12 and 14 of the Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence the fact of the case is different. 5.7.3 Findings, Observations and discussion-on Supply of hostel accommodation services to students with mandatory supply of meals and other necessary amenities, for duration of stay of 10 months this issue- a. After going through the facts of Thai Mookambikaa Ladies Hostel case and those in case of Hon ble Karnataka High Court in case of Taghar case and those stated by the applicant, we are of the opinion, that the facts are materially similar and provisions of law are pari materia and the question raised and answered are also same except question of liability to get registered. b. We have gone through the aforesaid judgments and provisions of law, and are of the opinion that the ratio laid down the judgment that the Hostel accommodation with compulsory supply of meals with hostel amenities as described is composite supply and eligible is in fact is renting of residential dwelling for residential purpose, and eligible for exemption, are correct and applicable to this case. There are Orders of Advance Ruling Authority of Rajasthan in case of M/s Mody Education Foundation, in ADVANCE RULING NO. RAJ/AAR/2022-23/04 dated 19-05-2022 , which are ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restriction of normally not differing from the view of another High Court on the Central legislation. In Maneklal Chunilal Sons Ltd. v. Commissioner of Income-tax (Central), Bombay [1953] 24 ITR 375 , it is observed: ------------------------------------------ Following this decision, in another Division Bench of this Court in the case of Commissioner of Income-tax v. Chimanlal J. Dalal Co. [1965] 57 ITR 285 i t is observed: This is the practice of this Court, and, as we have already stated, it has been generally followed by this Court, barring certain exceptions like where inadvertently the decision was not brought to its notice or where in the decision of the other Courts some relevant provision of law had been omitted to be considered. The decision of the Gujarat High Court is a very elaborate one, considering all the relevant provisions of law. This is, therefore, not a case in which we should depart from the aforesaid policy of this Court. The answer, therefore, will have to be against the Revenue. (Emphasis supplied) e. During the arguments Jurisdictional Officer did not bring to notice any contrary binding decision of either Bombay High Court or Supreme Court on this issue, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in KISHORE CHANDRA SINGH VS BABU GANESH PRASAD BHAGAT AIR 1954 SC 316 has held that expression residence only connotes that a person eats, drinks and sleeps at that place and it is not necessary that he should own it. The aforesaid decision was referred to by Bombay High Court in BANDU RAVJI NIKAM SUPRA. The hostel is used by the students for the purposes of residence. The students use the hostel for sleeping, eating and for the purpose of studies for a period ranging between 3 months to 12 months. In the hostels, the duration of stay is more as compared to hotel in guest house, club etc. (Emphasis supplied) b. Another guidance is available in the same judgement in paragraph 56 which is as under: 56. Ultimately, the Authorities have to lock into the aspect as to whether the particular place is a dwelling unit or not. When such being the case, since the hostellers are staying in the room for months together, it cannot be construed as non-residential unit and certainly it is a residential dwelling as provided in the Entry No. 12 of Exemption Notification No. 12 of 2017.--------- (Emphasis supplied) Use of words when such being the case since the hostelers are stayed in the room fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month of 10 months by separate contract and payment - 5.9.1 Submission or the Applicant-Similar to the above submission that the stay is for continuous duration of 10 months and is extended for further duration of one or two months. 5.9.2 Submission of the Jurisdictional Officer- is same as referred above. 5.9.3 Findings, observation and decision- It is seen that the earlier tenure of residence of 10 months is extended for further period of one month or 2 months by the old student will not change the nature of their earlier stay of 10 months (Residence) to temporary accommodation status hence, such supplies considering the earlier tenure 10 months will also be long term tenure and are considered as residence and eligible for benefits of exemption as per Entry at Sr No 3 of notification No. 12/2017-Central tax (Rate) dated 28 June 2017. 6. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons as discussed in the body of the order, the reframed questions based on duration of stay in the hostel are answered thus - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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