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2023 (12) TMI 510 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKAExemption from GST - renting of residential dwelling to the students and working women for residential purpose along with amenities and facilities such as food, furniture, appliance, cleaning, security, pest control etc., on monthly rental basis - exemption under entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - rate of GST - claim of ITC on input used for providing taxable service. HELD THAT:- The term 'residential dwelling' is neither defined in the Notification nor in the CGST Act 2017/ rules made there under. However the Education guide on Taxation of services, issued by the CBIC under erstwhile Service Tax Law, at para 4.13.1 while answering the question "What is a 'residential dwelling'?" directed to interpret the term 'residential dwelling' in terms of the normal trade parlance, as per which it is a residential accommodation, but does not include hotel, motel, inn, guest house, camp-site, lodge, house boat, or like places meant for temporary stay. Therefore it could be inferred from the above that residential dwelling is a residential accommodation meant for permanent stay and does not include guest house, lodge or like places. A residential accommodation to qualify for permanency of stay would typically have at least one room for exclusive use, a kitchen or facility to cook, essentials like electricity, water provided through metered/sub-metered connections or charged on actual usage, among others. The resident/inhabitants are offered a unit i.e a portion of a room with a cot on monthly rental basis. Further monthly rent also is charged and collected for the unit only but not for the residential dwelling. Thus the impugned accommodation being provided does not qualify to be a residential dwelling. Further it is seen that units are shared by one or more unrelated inhabitants. Applicant charges all the inhabitants of a room individually and not for a room as a whole. It is apparent that the accommodation provided to each of the inhabitant is not a residential dwelling but a cot / a unit in the room; un-related people share the said room and invoices are raised per bed on monthly basis are not characteristic of a residential dwelling - Further, it is also an admitted fact that the accommodation being provided by the applicant, out of the immovable property claimed as residential dwelling, does not have individual kitchen facility to each of the inhabitant and also cooking of food by inhabitants is not allowed, which are an essential characteristic for any permanent stay. On this count as well, the impugned accommodation being provided does not qualify to be a residential dwelling and thus the question of using the same as residence does not arise. The impugned accommodation being provided by the applicant are akin to provision of unit of accommodation in a paid guest house or a hostel and does not qualify to be a residential dwelling. Also the facilities such as food, furniture, appliance, cleaning, security, pest control etc., being provided by the applicant to the resident are not optional and the resident cannot choose the service provider. These facilities are mandatorily provided by the applicant and included in the monthly charges. Also the essentials like electricity and water are not charged based on usage, but a fixed amount is charged. Thus the service provided by applicant are unit accommodation for residence and not renting of residential dwelling - the services being provided by the applicant do not qualify for exemption under SI No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. If applicant transaction is not exempt, then what is the GST rate? - HELD THAT:- In the instant case the applicant is providing accommodation services consisting of rooms or units, without kitchens & with daily housekeeping services on a single or multi occupancy basis and thus merits classification under SAC 996311. Further the applicant is an establishment that provides the services that are akin to the services provided by Hotels, INN, Guest houses, Clubs & other similar establishments. The rent being charged per person per unit per day is less than rupees seven thousand five hundred and thus the impugned services, covered under SAC 9963, attract GST @ 12%, in terms of entry number 7(i) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. If applicant transaction is taxable, whether applicant can claim ITC on input used for providing taxable service? - HELD THAT:- The applicant can claim ITC on inputs used for providing the impugned taxable services subject to fulfilment of the conditions stipulated under Sections 16 & 17 of the CGST Act 2017 and the rules made thereunder.
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