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TMI Blog2023 (9) TMI 1630X X X X Extracts X X X X X X X X Extracts X X X X ..... a rent for using rooms which form part of a house as kitchen, bedroom, and living room etc., on the whole as residence. Thus, a common understanding of the term residential dwelling is one where people reside treating it as a home. Moreover, renting of residential dwelling does not include amenities like food, housekeeping, or laundry etc., whereas, a hostel is that of an establishment which provides living accommodation to a specific categories of persons 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. A house/ residential dwelling for occupation contain 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 as well, the impugned along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - HELD THAT:- 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 - 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. Whether the question raised by the applicant falls within the scope of Section 97(2) of the GST Act? - HELD THAT:- 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. Conclusions - i) The services by way of providing hostel acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant submitted that they are providing best hostel facilities to college female students and also to working women as most of the students and working people travel far and wide from their remote villages. The total charges collected for boarding and lodging per student or per inmate is Rs. 6500/- per month. They provide single room occupation, or double room sharing or dormitory style of accommodation and rates vary accordingly. 2.3. The Applicant's interpretation of law/facts in respect of the questions raised, they submitted the following that- They have licence to run the residential hostel for boarding and lodging under Section 5 of the Tamilnadu Hostels and Home for women and children (Regulation Act 2014) [hereinafter referred to as the Hostel Regulation Act ]. Section-2 (e) of the 'Hostels Regulation Act' defines Hostel or Lodging House to mean 'a building in which accommodation is provided for women or children or both either with boarding or not.' The term 'Home for Women Children is defined in section-2 (d) to mean 'an institution, by whatever name called, established or maintained or intended to be established or maintained for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son where the registration person is Proprietor of a Proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence and to such renting is on his own account and not that of the proprietorship concern. Thus, the inserted Explanation qualified only occupants/inmates who are registered persons for the purpose of reverse charge and the position remained the same when inmates were unregistered persons; Thus, in the case of the Applicant herein, the occupants or the inmates of the residential hostel are either students or working women are not registered persons under the GST Enactments. Thus, in such an event, the exemption that is available under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as also under the TNGST Act, 2017 and also under Entry 13 of Exemption Notification No.9/2017- Integrated Tax-Rate dated 28.06.2017 is applicable on all fours to the Applicant herein, irrespective of the threshold limit. The term residential dwelling is Not defined under the CGST Act, 2017/TNGST Act, 2017. Para-4.1 3.1 of the Taxation of services an education guide dated 20.06.2012' which was issued by the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide safe residence to students and working women/men and charges collected are nominal; Food given is the same for all occupants and no choice in menu given. The definition of landlord' is given under Section 2(c) and definition of 'tenant' is given under Section 2(n) of Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act, 2017 [TNRRRLT Act, 2017], from which it can be gathered that the term 'tenant' includes 'sub-tenant' also. Thus, if the Applicant is a tenant, then the hostel inmates are 'sub- tenants' and come within the ambit of 'tenants'. Further, Section 3 of TNRRRLT Act, 2017, specifies bar on some categories of institutions wherein this Act is not applicable; Hostels do not come under this 'barred list' and hence TNRRRLT Act is applicable to hostels also; therefore, the agreement between a hostel owner (he be an owner of the premises or a tenant himself) and the hostel inmates is a 'tenancy' as per 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ERATION and they have also admitted that they are receiving some amount for rendering accommodation and food services, which clearly falls under the ambit of definition of SUPPLY as provided in Section 7 of the TNGST/CGST-Act. The applicant registered under various acts to run its business. The act of the applicant covers under the definition of the term Business as per Section 2(17) of the TNGST /CGST Act which includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; The applicant is a service provider whereas they have referred the case law in respect of TNVAT Act which does not include the services but dealt with only goods. Their services does not fall under SERVICES BY WAY OF RENTING OF RESIDENTIAL DWELLING FOR USE AS RESIDENCE since they are letting out a single room to various inmates for various time period for a pecuniary 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate) dated 28.06.2017 also cover the heading 9963 or Heading 9972 deals with Service by way of renting of residential dwelling for use as residence . The entries referred above have two essential conditions 1. Service by way of renting of residential dwelling and 2. Use of residential dwelling as a place of residence. For the applicant's hostel to be eligible for exemption under the above mentioned entries, both the conditions should be satisfied. It is opined that with respect to the condition 1, the term residential dwelling is one where people reside treating it as a home or abode. Whereas a common understanding of a hostel is an establishment which provides inexpensive accommodation to persons like students, workers etc. The applicant's hostel has been constructed with the intention of providing hostel accommodation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) dated 30.09.2019, 'Hotel Accommodation' means supply, by way of accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes including the supply of time share usage rights by way of accommodation. 5.5. Further, the Central Authority stated that the questions raised in the application are not pending or has not been decided in any proceedings in the case of the applicant as per the Centre's record. DISCUSSION AND FINDINGS: 6.1. We have considered the submissions made by the applicant in their application for advance ruling and the submissions made by their AR during the course of personal hearing and additional submissions made thereon with reference to the issues involved and relevant facts. 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 as st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hotel, motel, inn, guest house, camp site, lodge, house boat, or like places meant for temporary stay. 7.1.4. Generally, renting of residential dwelling involves letting out any building or part of the building by a lessor to a person or family (related persons) against a rent for using rooms which form part of a house as kitchen, bedroom, and living room etc., on the whole as residence. Thus, a common understanding of the term residential dwelling is one where people reside treating it as a home. Moreover, renting of residential dwelling does not include amenities like food, housekeeping, or laundry etc., whereas, a hostel is that of an establishment which provides living accommodation to a specific categories of persons 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 contain 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 mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificates: a) The Applicant has Submitted FORM D License issued by the Tahsildar, Coimbatore (North) wherein as per section 2 of the THE TAMIL NADU PUBLIC BUILDING (LICENSING) ACT, 1965, 'hostel is deemed to be a public building' and as per Section 3, 'No building shall be used as a public building without a license and except in accordance with the terms and conditions specified therein'. b) Form III licence issued by the District Collector, wherein, as per section 4 of the Tamil Nadu Hostels and Homes for Women and Children (Regulation) Act, 2014, 'No person shall, on and after the commencement of this Act, establish, maintain or conduct any hostel, lodging house or home for women and children except under, and in accordance with a licence granted under this Act'. c) The Applicant has also submitted the following License/ Certificates for running Ladies Hostel; i. Sanitary Certificate issued by the Department of Public Health and Preventive Medicine under the provisions of the Tamilnadu Public Health Act, 1939. ii. Trade licence issued by the Coimbatore City Municipal Corporation under the provisions of the Coimbatore City Municipal Corporation Act, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only connotes that a person eats, drinks and sleeps at that place and it is not necessary that he should own it , appear to have been made in the context of the Indian Registration Act, 1908, while dealing with the issue of permanent residency and temporary residency. This is not the issue involved here. Further, this decision is not at all helpful in understanding the phrase Residential Dwelling for use as residence as mentioned in the exemption notification. 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 exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptions 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. 7.1.16. Further, it is observed that Entry at Sl.No. 14 of Notification No. 12/201 CT (R), Dated 28-6-2017: Serial No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services 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 was omitted vide Notification No. 4/2022 dated 13.07.2022. Thus, in effect, from 13.07.2022, only services by way of renting of residential dwelling for use as residence are exempted from GST. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply of 'outdoor catering..... 2.5 (v) Composite supply of outdoor catering together with renting of premises..... 2.5 (vi) Accommodation, food and beverage services other than (i) to (v) above 9 It is observed that hotels are meant for a temporary stay (2-5 days) and have lot of facilities and staff, but hostels are used for a longer period and have basic facilities with minimal staff required by the inmates to stay at a reasonable rate. Therefore, hostel services 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. Firstly, the service of providing hostel accommodation is not an exempt activity as discussed in the previous paras. It is seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant are not 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. For Question No. 2: 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. For Question No. 3: The supply of services by way of providing hostel accommodation falls under Tariff heading 9963 and is taxable @ 9% CGST + 9% SGST under Sl.No. 7(vi) of the 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. For Question No. 4: The activity of supply of in-house food to the inmates of the hostel amounts to providing services in a composite manner and the hostel accommodation services provided by the Applicant, being the principal supply, which is taxable (@18%, is the tax rate for the composite supply provided by them. For Question No. 5: No ruling is issued, as the question put forth by the applicant does not fall und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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