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TMI Blog2023 (9) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... 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,' 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 ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be tax rate for the composite supply provided by them. - SMT. D. JAYAPRIYA, I.R.S., AND SMT. N. USHA, MEMBER 1. Any appeal against this Advance Ruling order shall lie before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-Section (1) of Section 100 of CGST Act 2017/ 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential 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 Bharatiya Vidya Andhra Pradesh High Court decision in the case of Bhavan's Residential Public School v. State of Andhra Pradesh. Under the Exemption Notification, Entry No. 12 of Exemption Notification No. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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- to a residential 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 host ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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' 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 Host ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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. 6500/- 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bdivided, 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 as well, the impugned along with ancillary services. Thus, on this count 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istrict 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. 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 7.1.12. We find that the judgments cited by the Applicant are not applicable to the present case, as the facts of those cases are entirely different from the present case. A judgment should be understood in the light of facts of the case. Also, decisions of those cases were not in the context of GST laws. Hence the various case laws cited by the Applicant is of no avail. 7.1.13. Further, 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 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of renting of residential dwelling for use as residence are exempted from GST. Sl. No. Chapter/Section/Heading/Group/ Service Code (Tariff) Description of Service Rate (percent) Condition 14 Heading 9963 Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces cannot be equated to a hotel accommodation and hotel GST rates cannot be applied to a hostel. Therefore, we hold that supply of hostel accommodation services (Tariff heading 9963) is taxable @ 9% CGST + 9% SGST under Sl.No. 7(vi) of the above Notification (Sl.No. 7 (ix) as per original notification). 7.4.1. Regarding the fourth question raised by the Applicant, which is 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. It was stated by the Applicant that they are providing food services. They are providing only lodging services. In that case, this question is not relevant to the Applicant. 7.5. Regarding the fifth question raised by the Applicant, no ruling could be issued as the question put forth by the Applicant does not fall under the scope of Section 97(2) of the GST Act. In view of the above position, we give the following ruling; RULING For Question No. 1: The services by way of providing hostel accommodation supplied by the Applicant are not eligible for exemption under Entry 12 of Exemption Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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