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2024 (5) TMI 1029 - AAR - GSTExemption from GST - hostel accommodation being provided by the applicant to students and working women - residential dwelling for use as residence - Requirement for GST registration - Tariff heading - rate of taxability of the supply of hostel accommodation services - Taxability of in-house food supply as a composite supply - Scope of Advance Ruling. Exemption from GST - hostel accommodation being provided by the applicant to students and working women - residential dwelling for use as residence - HELD THAT - 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 - hostels are nothing but accommodations which provide temporary lodging to the inmates whether students or working people. Similar 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 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. The premises rented out by the applicant cannot be construed as residential dwelling. The hostel accommodation is not equivalent to residential accommodation and hence we hold that the services supplied by the applicant would not be eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate) dated 28-6-2017 and under the identical Notification under the TNGST Act 2017 and also under Entry 13 of Exemption Notification No. 9/2017-I.T. (Rate) dated 28-6-2017 as amended. Requirement for GST registration - HELD THAT - The applicant s service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate) dated 28-6-2017 as amended the applicant 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 - 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. Tariff heading - rate of taxability of the supply of hostel accommodation services - HELD THAT - The 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 accommodation and hotel GST rates cannot be applied to a hostel. Therefore the supply of hostel accommodation 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). Taxability of in-house food supply as a composite supply - In the event of the hostel accommodation being an exempt activity whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt 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 - 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.
Issues Involved:
1. Eligibility for GST exemption for hostel accommodation. 2. Requirement for GST registration. 3. Tariff heading and tax rate for hostel accommodation services. 4. Taxability of incidental supply of in-house food. 5. Scope of ruling under Section 97(2) of the GST Act. Summary: Issue 1: Eligibility for GST Exemption The applicant sought to determine if the hostel accommodation provided qualifies for exemption u/s Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate), dated 28-6-2017. The Authority ruled that the term "residential dwelling" does not include hostels, which are considered commercial establishments. The hostel accommodation provided by the applicant does not qualify as a "residential dwelling for use as residence" and thus is not eligible for the exemption. Issue 2: Requirement for GST Registration Since the service of providing hostel accommodation is not exempt, the applicant is required to register u/s 22 of the CGST Act, 2017 if the aggregate turnover exceeds twenty lakh rupees in a financial year. Issue 3: Tariff Heading and Tax Rate The supply of hostel accommodation services falls under Tariff Heading 9963 and is taxable at 9% CGST + 9% SGST under Sl. No. 7(vi) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, as amended. Issue 4: Taxability of Incidental Supply of In-House Food The supply of in-house food to hostel inmates is considered a composite supply, with the principal supply being the hostel accommodation services. Therefore, the entire composite supply is taxable at 18%. Issue 5: Scope of Ruling No ruling was issued for the fifth question as it does not fall under the scope of Section 97(2) of the GST Act. Ruling: 1. The services by way of providing hostel accommodation are not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate). 2. The applicant must register for GST if their aggregate turnover exceeds twenty lakh rupees. 3. Hostel accommodation services fall under Tariff Heading 9963 and are taxable at 9% CGST + 9% SGST. 4. The supply of in-house food is part of a composite supply with the principal supply being hostel accommodation, taxable at 18%. 5. No ruling is issued for the fifth question as it falls outside the scope of Section 97(2) of the GST Act.
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