9911796707
TMI Blog2023 (8) TMI 1554X X X X Extracts X X X X X X X X Extracts X X X X ..... resentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. The applicant, M/s. Snegithi Ladies Hostel and Catering, D 28, Pollachi Road, Eachanari, Coimbatore - 641001 (herein after referred to as 'The Applicant'), is registered under the GST Act, 2017, with GSTIN 33ANRPY7323E1ZM. The Applicant is running a ladies residential hostel for college students and working people. 2.1. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 2.2. The Applicant submitted that they have taken the premises on rent and they further let it out for college female students and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive list under S.No. (m) of Section-66D of the Finance Act 1994. Similarly, no VAT was leviable for supplying food to inmates, being an incidental activity to the activity of accommodation and reliance was also made on the Hon'ble Andhra Pradesh High Court decision in the case of Bharatiya Vidya Bhavan's Residential Public School v. State of Andhra Pradesh. * Under the Exemption Notification, Entry No. 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 [similar entry 13 of Exemption Notification No.9/2017- Integrated Tax-Rate dated 28.06.2017] reads as follows: Sl. No. Chapter/Section/Heading /Group/Service Code (Tariff) Description of Service Rate (%) Condition 1 Heading 9963 or Heading 9972 Services by way of Nil renting of residential dwelling for use as residence. Nil Nil * 'Residential accommodation' falls under the unconditionally exempt category. It is submitted that Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (and Entry 13 of Exemption Notification No.9/2017- Integrated Tax-Rate dated 28.06.2017) and also the identical Entry in the identical Exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Advanced Ruling, Karnataka, wherein the Hon'ble High Court has held the identical question of law in favour of "hostels" and has held that the exemption available in Entry 13 of Exemption Notification No.9/2017- Integrated Tax-Rate dated 28.06.2017 is available to hostel/residential dwelling meant for students or working people. * The hostels attached to educational institutions are exempt from GST and the applicant's hostel which essentially caters to students at very nominal charges in contrast to hostels attached to educational institutions also has to be exempt from the levy of GST and ought to fall outside the scope of levy. * They expend the nominal amount collected from the inmates on their food and clean environment with no profit motive. 3.1. The Applicants were offered personal hearing on 26.07.2023, wherein Smt. Aparna Nandakumar, Advocate (Authorised Representative -AR) appeared for the Applicant and reiterated the submissions made in the application. She highlighted the difference between hostel and hotel. She stated that: * The definition of 'hostel' under Section 2(e) of the Tamil Nadu Hostels and Home for Women and Children (Regulation) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place and it is not necessary that he should own it. ii. SC decision in Jagir Kaur Vs Jaswant Singh - Criminal appeal 143/1961 dated 13.02.1963 for the word 'reside'. iii. Delhi High Court judgment dated 22.09.1976 in VL Kashyap Vs R P Puri for the word 'dwelling house' or 'residential house'. iv. SC judgment dated 25.03.1981 in Indo International Industries Vs Commissioner of Sales Tax for submission that in the absence of a definition in the Enactment, dictionary meaning/popular meaning can be resorted to. v. SC judgment dated 13.09.2006 in CCE Vs Air Conditioning Corporation. vi. In Balakrishna Vs Sakuntala Bai AIR 1942 MAD 666, it was held that the expression 'resides' implied something more than 'stay' and implied some intention to remain at a place and not merely to pay it a casual visit. vii. Decision of England and Wales High Court dated 24.03.2010 in Dennis Philips and Royna Goddard Vs Martin Francis. viii. In Para 14 of Taghar Vasudeva Ambrish Vs AAAR, Karnataka and Ors, it is held that it is evident that the expression 'residence' and 'dwelling' have more or less the connotation in common parlan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls under Entry No. 7 (ix) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 viz. Accommodation, food and beverage services other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above and the rate of tax to the services are the settled one as per rate notification. From the above analysis of the issue in the hands, the following rate of tax is to be levied for the services rendered by the applicant with effect from 01.07.2017 upto 29.09.2019. Sub-Heading DESCRIPTION RATE OF TAX 996321 Room or unit accommodation services for students in student residences 18% 996322 Room or unit accommodation services provided by Hostels, Camps, Paying Guest etc 18% 996329 Other room or unit accommodation services n.c.c. 18% 4.3. Lastly, the State Jurisdictional Authority also opined that since the definition of Hotel accommodation was broadly expanded in the Notification No. 20/2019 Central Tax (Rate) dated 30.09.2019, wherein all the accommodation services including hostel accommodations services were brought in to the tax net @ 12% and hence rate of tax for the hostel accommodation services may be taxable @ 12% with effect from 30.09.2019 onwards. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential dwellings which are rented out for use as residence. Assuming but not admitting that the applicant's hostel is a residential dwelling, the same has to be rented out for use as residence. Whereas in the facts of this case it is rented out for use as a hostel facility or paying guest accommodation facility. As it is not rented out for use as residence but rented out as a hostel/paying guest accommodation facility, the exemption can't be extended. To put it in a nutshell, the place rented out is neither a residential dwelling nor being rented out for use as residence. Therefore, the applicant is not eligible for the benefit of this entry in the notification. 5.3. It was further stated that since the supply rendered by the applicant is not an exempt supply being not eligible for exemption covered under the entry referred above, the applicant would be required to take registration as per the provisions of Section 22 of the CGST Act, 2017 provided that the aggregate turnover in a financial year exceeds twenty lakh rupees. 5.4. It was opined that in the event of requirement of registration, hostel accommodation service provided by the applicant will fall under Sr. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly. * the premises used for providing these services are not owned by the Applicant but taken on rent. 6.4. The Applicant claims that the immovable property being used for providing accommodation is a residential dwelling which is used as residence by the inmates and thereby the rent received on such accommodation qualifies for GST exemption in terms of Entry No. 12 of Notification 12/2017 - Central Tax (Rate), dated 28.06.2017. 7.1.1. The first question raised by the Applicant is whether the hostel accommodation extended by the Applicant hostel would be eligible for exemption under Entry 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. The relevant Entry is reproduced here under: Sl. No. Chapter/Section/Heading /Group/Service Code (Tariff) Description of Service Rate (%) Condition 1 Heading 9963 or Heading 9972 Services by way of Nil renting of residential dwelling for use as residence. Nil Nil 7.1.2. Now, the fundamental issue to be discussed is whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Regarding the second part of the description of service 'for use as residence' it is observed that, though accommodation and residence seems to be synonymous, there is a subtle difference between the two. An accommodation is a location where someone is accommodated or provided with lodging. The term residence on other hand, in common usage, refers specifically to a place where someone resides permanently or for an extended period of time along with family/dependents; Therefore, we observe that hostels are nothing but accommodations which provide temporary lodging to the inmates, whether students or working people. Similar to converting a residential dwelling into a hotel and providing hotel services, which eventually makes the same dwelling "non-residential" and taxable, in the instant case, the residential homes (for use as a residence) have been converted into a commercial premises ie., hostel accommodation, thereby losing its status as 'residence dwelling' and has become a business premises comparable to a hotel. It is further observed that, there is no relationship of landlord and tenant between the hostel owners and inmates in as much as the inmates of hoste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also shows that hostel building cannot be considered as residential dwelling but a non-residential complex. 7.1.8. The exemption on "services by way of renting of residential dwelling for use as residence" envisaged under the said notification is conditional and restricted only the recipient of the services and NOT beyond. In other words, supply is the fulcrum of GST, the transaction of supply (with regard to Applicant) ends with the recipient of services only, insofar as the GST is concerned. Now, it is clearly known that the Applicant is not using the rented property as 'residence' by himself but only sub-let or rent out to others like students, working women, etc., for their use. This shows that the hostels are maintained for commercial purpose. We find that on this count also, the Applicant is not eligible for the exemption notification. From the above, it is evident that the premises taken on rent and further rented out by the Applicant cannot be construed as residential dwelling in view of the above discussed facts. 7.1.9. The AR has strongly placed reliance on the decision of the Hon'ble High Court of Karnataka in the case of Taghar Vasudeva Ambrish Vs. Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, exemption notification should be interpreted strictly. The Hon'ble Apex Court of India has made this abundantly clear in the case of Commissioner of Customs(Import), Mumbai Vs. Dilip Kumar & Company [2018 (361) E.L.T. 577 (SC)], while answering the question, 'what is the interpretative rule to be applied while interpreting a tax exemption provision/notification when there is ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied?' held that: " 52. To sum up, we answer the reference holding as under:- (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assesse to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assesse and it must be interpreted in favour of revenue" As per the above settled position of law and under the given circumstances and factual evidences produced, it is clear that the exemption is specific and particular a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent Nil Nil 7.1.17. Hence, it is clear that hostel accommodation is not equivalent to residential accommodation and hence we hold that the services supplied by the Applicant would not be eligible for exemption under Entry 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. 7.2.1. Regarding the second question raised by the Applicant, which pertains to the tariff heading and the rate of taxability of the supply of service, relevant entries in 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, is reproduced as under: Sl. No. Chapter/Section/Heading/Group or Service Code (Tariff) Description of Service Rate (%) Condition 7 Heading 9963 (Accommodation, food and beverage services) [(i) Supply of "hotel accommodation" having value of supply of a unit of accommodation less than or equal to seve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls the following three criteria: (a) Supply of two or more goods and services together. (b) Goods or services are naturally bundled, i.e. they are provided together in the normal course of business. 7.3.2. The natural bundle has the characteristic of where one service is the main service and the other services are ancillary services which help in better enjoyment of the main service. Further, there is a single price for the combined services. The principal activity of the Applicant is supply of accommodation Services. While providing such services, the charges are being realised in a consolidated manner for the value of food and other like services rendered. The Applicant has stated that they do not charge separately for the other services provided by them. Thus, the services provided by the Applicant are composite in nature. 7.3.3. As per Section 8 of the CGST Act, 2017, for a Composite supply, the tax rate on the principal supply will be treated as the tax rate on the given composite supply. We hold that since the Applicant provides a number of services in a composite manner, the hostel accommodation services provided by the Applicant, being the principal supply, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
