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TMI Blog2023 (9) TMI 1645X 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 A.J. Nest, No.30, GKD Nagar, Pappanaickenpalayam, Coimbatore-641 037 (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 - 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 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 vill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Integrated Tax- Rate dated 28.06.2017] reads as follows: Serial No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (%) condition 1 Heading 9963 Or Heading 9972 Services by way of renting of residential dwelling for use as residence NIL NIL * Thus 'residential accommodation' falls under the unconditionally exempt 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 against Entry 12 which reads as follows: о "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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 occu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dences 18% 996322 Room or unit accommodation services provided by Hostels, Camps, Paying Guest etc. 18% 996329 Other room or unit accommodation services n.e.e. 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 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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.c. 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 Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: Serial No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services 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. 7.1.3. 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 tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 i.e., 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 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 fees 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 Na ..... 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 ..... td. 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: Serial No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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) Supply of goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fifth question raised by the Applicant, no ruling could be issued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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