TMI Blog2021 (8) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... cular No. 32106/2018-GST dated 12th February 2018, it is held that, the applicant s activity is satisfying the conditions of Entry Sr.no. 14 of said Notification and hence would be exempt from taxes. - GST-ARA-72/2019-20/B-51 - - - Dated:- 27-8-2021 - SHRI. RAJIV MAGOO, AND SHRI. T. R. RAMNANI, MEMBER PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application is filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. GHODAWAT EDUSERVE LLP , the applicant, seeking an advance ruling in respect of the following questions. 1. Whether the activity of providing the hostel on the rent to various students by applicant is exempt (where hostel fees charged per student per day is much less than ₹ 1000/-)? 2. If is it exempt it shall be claimed as exempted under Serial Number 12 or Serial Number 14 of Notification No. 12/2017- Central Tax (Rate) (as amended time to time) dated 28/06/2017 ? At the outset, we wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which forms the Centre of his existence. Dwelling may be a house or part of a house and even a single room as a part of a house, may be a dwelling. However, the use a person makes of it when living there depends on his mode of life. Such a place does not cease to be a dwelling merely because one takes all or some of one s meals out; or brings take-away food in to the exclusion of home cooking: or at times prepares some food for consumption on heating devices. For example, roams in colleges at the universities in which unmarried fellows live are dwelling house even if the fellows do not prepare their own meals or cook in their rooms. Such rooms may lack cooking facilities and, even, running water and the fellows eat in hall or bring meals from college kitchens, but, such rooms continue to be dwelling house. A bed-sitting room which a tenet occupies as his home may he a dwelling. A room can be regarded as home and, consequently, a dwelling house even if there is no bed therein, as the person may sleep in an armchair, or in blankets on the floor. 2.6 From the above interpretation of the court, it can be concluded that, any premises, which can be used as residence for stay, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porary stay (a few days bonafide use of a person or his family for a reasonable period shall be residential use; but if the same is given for a short stay for different persons over a period of time the same would be liable to tax (emphasis supplied) 2.12 Hence from the combined reading of the above exemptions / relaxation and various references under Finance Act 1994 it seems Serial Number 12 of Notification No. 12/2017- Central Tax (Rate) is applicable for the renting of immovable property in the instant case. Statement containing the Applicant s interpretation of law and /or facts 2.13 From the above it seems Serial Number 12 of Notification No. 12/2017- Central Tax (Rate) is applicable for the renting of immovable property in the instant case. Therefore the activity by way of providing hostel facility is eligible for exemption under entry No. 12 of Notification No. 12/2017- Central Tax (Rate) which is produced as below SI.No. Chapter, Section or Heading Description of Service Rate % Condition 12 Heading 9963 or Heading 99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of time. Also the rooms in hostel are let out to the students for residential purpose only and in normal course of action in all of the cases it is actually used by students for residence only. So in our case the requirements of this exemption entry are fully satisfied. 2.20 Rather the other conflicting Entry i.e. Entry No 14 (discussed below separately) of the said Notification may cover residual cases of Residential Dwellings (in addition to short term accommodations such as Hotels, inn, Guest Houses etc.) such as let out for a short period of time such as Home Stay etc. or house given on rent as a hotel or a lodge if the declared tariff of a room is less than ₹ 1000/- further declared tariff is replaced with the value of supply w.e.f 27.07.2018 as per Notification No.14/2018-C.Tax (Rate) dated 28.07.2018. 2.21 Exemption under Sr. No.14 is available for services provided by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purpose, having value of supply of a unit of accommodation below ₹ 1000/- per day or equivalent. This exemption was also available under erstwhile Service Tax vide Sr. No. 18 of Not. No.25/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accordingly concluded that the exemption under Sr. No.14 of Notification No.1212017-C.T. (Rate) dated 28.06.2017 is also available to hostels CBEC vide Circular No.32/06/2018-GST dated 12th February, 2018. 2.24 Considering the discussions herein above, the applicant observes that there is no difference in the exemption/relaxation given under Finance Act, 1994 vis- -vis exemption granted under GST Notification with respect to service by way of renting of residential dwelling used for residence and short terms accommodation. Also as discussed at length above, both the conditions to get covered under the Entry Number 12 viz. Residential Dwelling Used for residential purpose are getting satisfied in subject case. 2.25 Further the general view of CBEC and few of the AAR pronouncements to treat the exemption under Entry Number 14 of Hotels, Inns, Guest houses applicable to Hostel sounds little absurd as there is basic difference in the arrangements of stay in a hostel/ hotel such as followings: 1. Hostels are hired out for inmates for longer periods of stay comparable to use as residence whereas Hotels/ Guest Houses are usually for shorter duration off few days. 2. Ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for religious, charitable or educational purposes or as factories or workshops. Revenue relied on strict interpretation to the exemption notification which favours them in case of a doubt I ambiguity referring to the earlier Supreme Court decisions (Wood Paper Ltd case [(1990) 4 SCC 256], Star Industries case [(2016) 2 SCC 362]) and Larger bench decision in Dilip Kumar and Co.[ 2018 (361) ELT 577 (SC)] Whereas Assessee countered with distinction between interpretation of a beneficial exemption notification vis-a-vis general exemption notification, which provides for a liberal and purposive interpretation to achieve the beneficial purpose behind such exemption. 2.27 Hence to sum up we are of the opinion that the Entry No 12 of NN 12/2017 dated 28/06/2017 Services by way of renting of residential dwelling for use as residence amended from time to time is applicable in the present case of the applicant as it satisfied all the prerequisite based on the facts of the case. 03. CONTENTION - AS PER THE CONCERNED OFFICER: OFFICER s SUBMISSION DATED 20.08.2021:- 3.1 The taxpayer is providing hostel facility to the students on demand basis and charging them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is taxable under the provisions of Central GST Act, 2017. 3.6. The Appellate Authority of Advance Ruling (AAAR) in its judgment reported in 2019 (24) GSTL 496 (AAR-GST) and 2019 (24) GSTL 109 (AAR-GST) has decided similar case, where the party was trying to classify the hostel room in the activities of charitable trust, and held that supply of hostel services for a nominal lump-sum amount of ₹ 6,000/- to ₹ 7,000/- per month along with ancillary services such as food and parking without any additional costs is not covered under the definition of charitable activities in terms of para 2(r) of the Notification No. 12/2017-Central Tax (Rate) as per CBIC Circular No.32/06/2018-GST dated 12.02.2018. These case laws are squarely applicable in the present case as the applicant is also trying to define the hostel room as residential dwelling. Therefore, the benefit of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is not available to the tax payer M/s. Ghodawat Eduservice LLP. 04 HEARING 4.1 Preliminary hearing in the matter was held on 22.01.2019. Sh. Gangadhar Haldikar, CA, Shri. Ramkrushna Lingsur, CA and Shri. Shyamsundar Ramati, Advocate ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 28/06/2017 (hereinafter referred to, as the said notification) as amended, for Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having value of supply of a unit of accommodation below one thousand rupees per day or equivalent. 5.6 It is therefore, necessary to examine the relevant entries at the Sr.No.12 and Sr.No. 14 of the said Notification dated 28.6.2017 to understand as to how the said entries will be applicable to the impugned activity undertaken by the applicant. The relevant parts of the said Notification are reproduced as under:- Sr.No Chapter, Section, Heading, Group of Service code (Tariff) Description of Services Rate % Condition 1 Chapter 99 12 Heading 9963 or Heading 9972 Services by way of renting of residential dwelling for use as residence. Nil Nil 14 Heading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to stay along with the students. Considering the scenario and the facts of the case, we don t find that the criteria for residential dwelling under the common parlance test are satisfied. In the case of residential dwelling, generally there is no restriction regarding the stay of the family members or guest or individuals. They can prepare their own food in their own kitchen in the rooms/flats taken on rent, the food is not provided by the owner of the premises. Further, in such cases of residential dwelling there is no embargo in respect of visits and stay by friends, relatives, etc. The period of stay in residential dwelling is specified in the agreement. 5.9 In the present case, the Hostel room which is usually allotted on sharing basis to 3 students is for a period which is usually more than 3 months. The rooms in hostel are let out to the students for residential and study purpose only, that too during the training and coaching periods. These are the basic differences between a residential dwelling and a Hostel. Hence, applicant s contention that the subject activity is covered under entry No.12 of the said notification is not acceptable. Therefore, the subject activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of use of hostel rooms given for residential purposes. The relevant portion of Sr. No. 14 of Notification No. 12/2017 is as under:- Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description Description of Rate (per cent.) Services Condition (1) (2) (4) (5) 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 5.14 From the scrutiny of above exemption entry no. 14, we find that the description of service is user based, meaning that, if the accommodation is used for residential or lodging purpose then it is immaterial who the user is. The said entry mentions Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging ..... X X X X Extracts X X X X X X X X Extracts X X X X
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