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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 ..... , 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. Arihant Hostel, No.66/1, Dr. Jaganatha Nagar, 7th cross, opposite CMC, Coimbatore 641014 (herein after referred to as 'The Applicant'), is unregistered with GST. The Applicant is running a Men's 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 working women as hostel accommodation, as since most of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 or Service Code (Tariff) Description of Service Rate (%) Condition 1 Heading 9963 or Heading 9972 Services by way of 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 Exemption Notification under TNGST Act, 2017 Notification underwent an amendment in the year 2022 by virtue of 15/2022-Central Tax (Rate) dated 30.12.2022 wherein an Explanation was inserted in Column-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Entry 13 of Exemption Notification No.9/2017- Integrated Tax-Rate dated 28.06.2017 is available 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) Act, 2014 and also definition of 'home for women and children' in Section-2 (d) of the said Act are available. The term 'residential hotel' is defined in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;. 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 parlance and therefore, no different meaning can be assigned to the expression 'residential dwelling' and it cannot be held that the same does not include hostels which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (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. SAC 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.e.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. 4.4. The Joint Commissioner (ST), Intelligence, Coimbatore has informed that no proceeding is pending in respect of the applicant. 5.1. The Applicant's jurisdictional Central Authority h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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. 7 (i) under the heading 9963 (Accommodation, food and beverage services) i.e. Supply of 'hotel accommodation' having value of supply of a unit of accommodation les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodation 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 or Service Code (Tariff) Description of Service Rate (%) Condition 1 Heading 9963 Or Heading 9972 Services by way of renting of residential dwelling for use as residence NIL NIL 7.1.2. Now, the fundamental issue to be discussed is whether the hostel accommodation being provided by the Applicant to students and working women qualify to be a residential dwelling for use as residence as described in the above entry and thus eligible for exemption or not. 7.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 ic., 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 hostels have no obligation to maintain or repair the fixtures and fittings and there is no division of maintenance responsibility between the hostel owners and inmates which is normally followed in the case renting of residential dwelling to a fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Leave Petition (Civil) No. 29980/2022 has been filed against this order before the Hon'ble Supreme Court of India and the case is pending disposal. 7.1.10. The Applicant has claimed that 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. But we find that the eligibility to claim exemption is not solely dependent upon the zoning regulations. Even if the hostels are permitted in residential zone, it does not partake the character of the 'residential dwelling'. The land used for the purpose of Zoning Regulations is not determinative factor to decide whether the impugned property is hostel or residential dwelling for the purposes of tax. Further, the Licenses and Certificates obtained by the Applicant under various enactments in Tamil Nadu, clearly leads to an inference that Hostel Buildings are considered only as commercial or public buildings and not as residential building. 7.1.11. The decision of the Hon'ble Supreme Court, relied upon by the Applicant, in the matter of KISHORE CHANDRA SINGH VSBABU GANESH PRASAD BHAGAT AIR 1954 SC 316 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Collector of Central Excise 1991 taxmann.com 73/1990 (47) ELT 491 (SC), that; "in interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the Notification. All parts of it should be read harmoniously in aid of, and not in derogation of that purpose". Therefore, in order to implement the notification, it is necessary to keep in mind the purpose and the objective of notification. The relevant portion of Notification No. 12/2017-CT (R), Dated 28-6-2017 is reproduced herewith: Sl. No. Chapter/Section/Heading/Group or Service Code (Tariff) Description of Service Rate (percent) Condition 12 Heading 9963 Or Heading 9972 Services by way of renting of residential dwelling for use as residence NIL NIL 7.1.15. From the above, we find that it is clear that the purpose and objective of the notification is nothing but to avoid taxing residential properties taken on rent by family or individuals and 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,& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees." Therefore, we hold that the Applicant is required to get themselves registered in the state of Tamil Nadu, if their aggregate turnover in a financial year exceeds twenty lakh rupees. 7.3.1. Regarding the third 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 seven thousand five hundred rupees per unit per day or equivalent. 6 (ii) Supply of 'restaurant service'...... 2.5 (iii) Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods or services are naturally bundled, i.e. they are provided together in the normal course of business. 7.4.2. 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. 7.4.3. 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 taxable @18%, will be tax rate for the composite supply provided by them. 7.5. Regarding the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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