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TMI Blog2023 (8) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividuals 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,' 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate for the composite supply provided by them. - SMT. D. JAYAPRIYA, I.R.S., AND SMT. N.USHA, 1. Any appeal against this Advance Ruling order shall lie before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai as under Sub-Section (1) of Section 100 of CGST Act / TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed is communicated. 2. In terms of Section 103(1) of the Act, Advance Ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling. (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. In terms of Section 103(2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Advance Ruling obtained by the applicant by fraud or suppression of material facts or misrepresentation 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 Good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic 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 Tamilnadu 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 clause (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 relied 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 Notifications above mentioned, Entry No. 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 [ similar entry: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like places meant for temporary stay.'; To understand the term 'dwelling house' they rely on 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. They rely 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 to a residential hostel/residential dwelling meant for students or working people. The hostels attached to educational institutions are exempt from GST and their 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, 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' 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 Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 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.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 30.09.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 renting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 landl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce , 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 Special 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 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 of Rohit Pulp and Paper Mills Ltd. 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 herewi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CT(Rate) dated 28.06.2017 as amended, the Applicant is the very much be required to take registration under the GST Enactments, as 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 of service shall be liable to be registered under this Act in 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 No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipient 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, 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 compos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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