9911796707
TMI Blog2023 (9) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... ', 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 the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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, being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. 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. M/S LARA LADIES HOSTEL, 3/45, Thirunavukarasu Nagar, Rathinapuri, Kuniyamuthur, Coimbatore 641008 (hereinafter referred to as 'The Applicant'). 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/ cash under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 2.2. The Applicant submitted that they have taken the premises on rent and they further let it out for college female students and working women as hostel accommodation, since most of the students and working people travel far and wide from their remote villages. The applicant herein also provides food as part of hostel services at nominal rates. But, the choice is given to the inmates to opt for lodging or for boarding and lodging. The Applicant has its own in-house kitchen facilities with their own staff, to provide homely, tasty and healthy food ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 [similar entry 13 of Exemption Notification No.9/2017- 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 12 Heading 9963 Or Heading 9972 Services by way of renting of residential dwelling for use as residence NIL NIL 'Residential accommodation' falls 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: 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, (i) the registration person is proprietor of a proprietorship concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 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 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation 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) dated 28.06.2017 also cover the heading 9963 or Headi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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.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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 12 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 trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling 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 facilitics 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 Nadu under the respective enactments and the Applicant also submitted copies of such licences/certificates: a) The Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this count also, the Applicant is not eligible for the exemption notification. From the above, it is evident that the premises taken on rent and further rented out by the Applicant cannot be construed as residential dwelling in view of the above discussed 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 permitted in residential zone, it does not partake the character of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. (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/assessee 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 herewith: Serial No. Chapter, Section, Heading, Group or Service C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is very much be required to take registration under the GST Enactments, as the 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 Notification No. 11/2017, Central Tax (Rate), dated 28.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 composite in nature. 7.4.3 As per Section 8 of the CGST Act, 2017, f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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