9911796707
TMI Blog2023 (9) TMI 1647X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.2012', issued by the CBIC, the expression 'residential dwelling has been interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest house, camp site, lodge, house boat, or like places meant for temporary stay - 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodation 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). Whether the supply of in-house food to hostel inmates is exempt as part of a composite supply? - 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. 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 - the Applicant provides a number of services in a composite manner, the hostel accommodation services provided by the Applicant, bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral 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. Sri Krishana Ladies Hostel, No.54, Sowbaggiya Nagar, C Block, Civil Aerodrome Post, Sitra, Coimbatore 641 014 (herein after referred to as The Applicant'), is unregistered with GST. The Applicant is running a ladies residential hostel for college students and working people. 2.1. The Applicant has submitted the copy of application in Form GST ARA 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 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. 6600/- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 underwent an amendment in the year 2022 by virtue of Notification 15/2022-Central Tax (Rate) dated 30.12.2022 wherein an Explanation was inserted in Column-3 against Entry 12 which reads as follows: 0 Explanation For the purpose of exemption under this entry this entry shall cover services by way of renting of residential dwelling to a registered person 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 inmate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made in the application. She highlighted the difference between hostel and hotel. She stated that: The definition of 'hostel' under Section 2(c) 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 Section-2 (14) of the Tamil Nadu Shops Establishments Act, 1947, and by which hostel cannot be equated to hotel. The duration of stay in hotel is short and it is a temporary accommodation whereas the duration of stay in a hostel is for a long term. The hostel are run with a motive to provide 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 used for residential purposes by students or working women. 4.1. The Applicant's jurisdictional State Authority had submitted the following remarks in respect of the questions raised by the Applicant: The request of the applicant is not capable of compliance since: The motive of the Applicant is to run the ladies hostel against the CONSIDERATION 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 simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 has submitted their remarks on the questions raised as under: Entry 12 of Exemption Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 covering Heading 9963 or Heading 9972 deals with Service by way of renting of residential dwelling for use as residence . The identical Notification under the TNGST Act, 2017 and Entry 13 of Exemption Notification No. 09/2017 Integrated Tax (Rate) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ostel 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 less than or equal to seven thousand five hundred rupees per unit per day or equivalent and will attract 12% GST with effect from 18th July, 2022 as per the Principal Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 20/2019 Central Tax (Rate) dated 30.09.2019 and further amended by Notification No. 03/2022 - Central Tax (Rate) dated 13.07.2022. In the Notification No. 20/2019 Central Tax (Rate) 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7.1.3. In this regard, we observe that the term 'residential dwelling' has not been defined either under CGST Act or under Notification No. 12/2017. However, under the erstwhile service tax law, in paragraph 4.13.1 of the Taxation of Services: An Education Guide dated 20.06.2012', issued by the CBIC, the expression 'residential dwelling' has been interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include 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, rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res 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 family or a person. Therefore, it is clear that hostels refer to a place where someone is accommodated or provided with lodging or boarding and lodging facilities against a charge or fecs for the services rendered. 7.1.7. Further, we find that there are certain regulatory provisions for running hostels and licence/certificates are to be obtained by a person running hostels in the state of Tamil Nadu under the respective enactments and the Applicant also submitted copies of such licences/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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 is not applicable to the present issue. The observation of the Hon'ble Supreme Court in the said decision, that Residence only connotes that a person cats, 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 Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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,' 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. 7.1.16. Further, it is observed that Entry at Sl.No. 14 of Notification No. 12/2017- 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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) Supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms 2.5 (iv) Supply 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 accommodati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply 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 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 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 providi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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