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TMI Blog2023 (8) TMI 1557X X X X Extracts X X X X X X X X Extracts X X X X ..... d the benefit of exemption is not extended to the premises which do not qualify as residential dwelling for use as residence. Further, unless the twin conditions of renting of residential dwelling for use as residence, being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence. It is clear that hostel accommodation is not equivalent to residential accommodation and hence 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. Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant s service of providing hostel accommodation is not eligible for exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them. X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained for the reception, care, protection for welfare of women children or both'; On the other hand, the term 'residential hotel' is defined in Section -2 (14) of The Tamil Nadu Shops and Establishments Act, 1947 to mean 'any premises in which business is carried on bonafide for the supply of dwelling accommodation and meals on payment of a sum of money to a traveler or any member of the public or class of the public'; Thus, the 'hostel' accommodation which falls within the purview of the 'Hostels Regulation Act' cannot be equated with that of a hotel accommodation which falls within the realm of The Tamil Nadu Shops & Establishments Act, 1947 by any stretch of imagination. * Under the erstwhile Service Tax regime, the 'services by way of renting of residential dwelling for use as residence' was included in the negative 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 Resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Services: An Education Guide dated 20.06.2012' which was issued by the Central Board of Indirect Taxes & Customs under the erstwhile Service Tax Regime has defined the term "residential dwelling" as: "The phrase residential dwelling has not been defined in the Act. It is therefore to be interpreted in normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, Inn, guest house, camp site, house, lodge, house boat or like places meant for temporary stay.'; * To understand the term 'dwelling house', the decision of the House of Lords in appeal in the case of Uratemp Ventures Limited v. Collins (AP), [2001] UKHL 43 dated 11/10/2001 is relied upon. to a residential * Reliance can be made on the decision of the Hon'ble Karnataka High Court in the case of Taghar Vasudeva Ambrish -vs- Appellate Authority 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 hostel/residenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r TNRRRLT Act, 2017. * The buildings used as hostels are 'residential buildings' as per the Zoning Regulations as stated in Rule 33 of the Tamil Nadu Combined Development and Building Rules, 2019 and are specified in Annexure XVIII, wherein under the Residential Use Zone, Entry No. (vii) is given Working women's hostels, old age homes'. The property tax receipts categorize hostels in 'residential' zone only. * The tenants living in these hostels often give the hostel address as their place of residence for procurement, verification or receiving government, bank or other similar official documents. * Reliance is made on the following decisions: i. The Hon'ble Supreme Court in Para 11 of the judgment 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. 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' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... niary benefit. * In this type of transactions, they are not entering any rental agreement with the inmates for the transfer of rights of the specified place for a specific period and hence it does not cover the definition of residence which is controlled by the Tamil Nadu Rent Regulation Act. * The rent received from the renting out or subletting of property is subject to Tax Deduction at Source. They are not deducting any TDS under section 194 I of the Income Tax Act. * Hence, the claim of renting of residential dwelling for the use as residence become failure. 4.2. In addition to the above, the State Jurisdictional authority further stated that they are rendering services by way of renting of immovable property with a business motive for pecuniary benefit. These services are classified under Heading 9963 (Accommodation, food and beverage services). The services rendered by the applicant clearly falls 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation which is more akin to sociable accommodation rather than what is commonly understood as residential accommodation. Hostel rooms are similar to rooms given by hotel, inn, guest house, club site or campsite, by whatever name called, or other commercial places which attract GST and are covered by different entries in the schedule of different notifications and this shows that rooms though given on rent for residential purposes would not amount to "residential dwelling". * Moreover, hostels even though given for residential or lodging purposes are commercial places registered as "commercial establishments" for the purposes of electricity, water, trade licence etc. Therefore, the applicant's hostel cannot be termed as "residential dwelling" and has to be treated as a commercial place only. 5.2. The Central Authority further stated that coming to the second condition of the entry in the notification, it needs to be mentioned that it is intended for residential 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 residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 6.2. Before moving further, we have to determine the admissibility of the application. In terms of Section 97(2) of the CGST/TNGST Act, out of the Questions 1 to 5 on which advance ruling is sought under the Act, Questions 1 to 4 fall within the scope of Section 97(2)(a), (b), & (f) of the CGST/TNGST Act, 2017, and therefore the application is admissible for these Questions only. 6.3. The facts of the case are that the Applicant stated that- * they are running a Men's hostel providing boarding and lodging facilities to students and working women. They are also providing certain ancillary services such as housekeeping, security arrangements, Television, parking facility etc. * charges of Rs. 8,000/- per bed is being collected per inmate per month for providing all the above facilities excluding electricity charges; the charges collected are per bed charges and these charges are also dependent on number of persons sharing the room; the invoices to the habitants are raised accordingly. * the premises used for providing these services are owned by the Applicant. 6.4. The Applicant claims that the immovable property being used for providing accommodation is a residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as students & workers. The Applicant has rented out the premises with the intention of providing hotel accommodation which is more akin to sociable accommodation rather than what is typically considered as residential accommodation. 7.1.5. Further, a house/ residential dwelling for occupation contains one or more rooms with one/part of the room being used as kitchen and the other/part as living room etc. But, in the instant case, a single house with two or more rooms where normally a single family resides, is subdivided, and let out to different persons and rent being collected on per bed basis with bundle of other services against a consideration clearly constitutes a business of supplying accommodation services along with ancillary services. Thus, on this count as well, the impugned accommodation thus provided does not qualify as a residential dwelling and thus the question of using the same as residence does not arise. 7.1.6. 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 someo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... City Municipal Corporation under the provisions of the Coimbatore City Municipal Corporation Act, 1981. iii. No objection certificate issued by the District Officer, Tamilnadu Fire and Rescue services. iv. Stability Certificate (Form A) issued by Charted Civil Engineer License issued under Food Safety and Standards Act, 2006, for food services. We find that the above provisions are not mandatory or applicable to a typically residential building or "residence dwelling for use as residence", whereas it is mandatory for a hostel building. This also shows that hostel building cannot be considered as residential dwelling but a non-residential complex. 7.1.8. From the above, it is evident that the premises rented out by the Applicant cannot be construed as residential dwelling in view of the above 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. Appellate Authority for Advance Ruling, dated 07.02.2022, wherein it was held that hostel is a residential dwelling and since it is used for residence, the assessee is eligible for exemption. However, it is observed that Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar & 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 assessee 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/assessee 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 about the housing residence sector and NOT to other places which are not residential that are rented out. 7.1.14. Further, it was observed by The Hon'ble Supreme Court of India in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odation 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, from the previous discussions, it is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 as amended, the Applicant is very much be required to take registration under the GST Enactments, as the arrangement between the Applicant and the hostel occupants is liable to be classified as transaction in the course of furtherance of business and hence, as per Section 7(1)(a) of CGST Act, 2017 read with Entry No. 2(b) of the Second Schedule to the CGST Act, the said transaction constitutes "supply". 7.2.2. Thus, the Applicant is a supplier of services and therefore, in terms of Section 22 of the GST Acts, which states that: "Every supplier o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Firstly, the service of providing hostel accommodation is not an exempt activity as discussed in the previous paras. It is seen from the submissions of the Applicant, that along with the provision of accommodation services, they are also providing food and certain other services to the inmates of the hostel for consolidated charges. Now it is pertinent to see the definition of 'Composite Supply' which is given under Section 2(30) of the GST Act": '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'. Therefore, the definition implies that a supply of goods and/or services will be treated as composite supply if it fulfils the following three criteria: (a) Supply of two or more goods and services together. (b) Goods or services are naturally bundled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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