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2023 (9) TMI 1608
Revision u/s 263 - AO had not examined the claim of deduction u/s 54B of the Act made by the Ld. AO, thereby making reassessment order erroneous and prejudicial to the interest of the Revenue - HELD THAT:- The words used in section 263 of the Act clearly indicate that the revisionary authority has to independently apply his mind to the materials on record before coming to a conclusion that the order sought to be revised is erroneous and prejudicial to the interests of revenue.
The decision making process u/s 263(1) has to be that of the revisionary authority and cannot be at the behest of some other subordinate authority. In the facts of the present appeal, it is abundantly clear that the exercise of powers under section 263 of the Act is not due to any independent application of mind by the revisionary authority, but at the behest of the Income-tax Officer.
Had the Assistant Commissioner of Income Tax not sent any proposal for initiating proceedings under section 263 of the Act, it is quite probable, the revisionary authority may not have exercised his powers under section 263 of the Act. That being the factual and legal position, in our view, the exercise of powers under section 263 of the Act in the present case has to be declared invalid.
PCIT has mentioned that agreement to purchase agricultural land from Smt. Sangeeta Singh cannot be made the basis for deduction u/s 54B of the Act. It is not in dispute that in the instant case, an agreement to sell cum with possession deed was duly executed on 30.07.2009. The observation of the Ld. PCIT gives raise to the legal question whether any right is created in favour of the purchaser on execution of agreement to sell.
As relying on Sanjeev Lal [2014 (7) TMI 99 - SUPREME COURT] we hold that the exemption u/s 54B of the Act is admissible since the assessee sold agricultural land and made payment for purchase of another agricultural land and took possession of land thereon.
Thus, we hold that the impugned order passed under section 263 of the Act is unsustainable. Accordingly, the order passed under section 263 of the Act is quashed and the assessment order is restored.
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2023 (9) TMI 1607
Refusal to grant/approval Registration of Trust u/s 12AB - objects for carrying on CSR activities and for Public Charitable purposes - HELD THAT:- The decision of the Ld. CIT Exemption rejecting the grant/Approval of appellants application without pointing out any deficiency in objects or activities of the Trust in violation of provisions to proviso to section 2(15) of the Act, and discussion about the manner of activities being carried out by the company and whenever contributions made to the impugned Trust were claimed as Business expenditure or even otherwise was not eligible for deduction in respect of such contribution/s for CSR activities/Public Charitable purposes in spite of the facts that the Trust claimed to have submitted its duly audited Financial Statement for the year ended 31.03.2021 and 31.03.2022 and also details of such expenditure incurred upto 31.12.2022, duly supported by Bills/vouchers/supporting documents evidencing amount spent/incurred for such specified CSR activities / Public Charitable purposes.
As seen that in the present cases the impugned orders of the the CIT (Exemptions) are non-speaking and without discussion in refusal to grant Registration u/s 12AB and approval u/s 80G of the Income Tax Act because, he has not addressed the objectives and activities of the Trust, in respect of the appellant, being ongoing entity for three financial years.
CIT(E) order of rejection of the applications in arbitrary manner for the reason that he has not addressed the submission of appellant that the composition of the Trust is restrictive without considering clause ' 18' of the Trust Deed where the maximum numbers of the Trustees could be seven, and that there was no restrictive clause to limit the appointment of number of trustees, even the Directors of the company when there are no existing legal restrictive provisions that the directors of the company could not be the Trustees of Trust so formed. We consider it deem fit to remand back the matter to the file of the CIT exemption to adjudicate the issue of grant of registration under section 12AB and approval under section 80G.
Appeals filed by the assessee are allowed for statistical purposes.
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2023 (9) TMI 1606
Liability of Service Tax for construction projects involving consulting engineering services and works contract services - adjudicating authority gone beyond the scope of the order passed by this Tribunal on remand - HELD THAT:- The ld. Adjudicating Authority has considered the issue on merits also and the issue of taxability is to be seen on merit also whether the said services are taxable or not and the ld. Adjudicating Authority has examined the same and after examining the merits of the case, dropped the proceedings against the respondents.
As no bifurcation was available, moreover, there was composite contracts, the merits classification of the services rendered by the respondents has fallen under the category of “Works Contract Service” and no demand was proposed in the show-cause notice under the category of “Works Contract Service”, therefore, there are no infirmity in the impugned order and the same are upheld.
The appeals filed by the Revenue are dismissed.
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2023 (9) TMI 1605
Denial of registration u/s 12AB and 80G - AR submitted that the order of the CIT(E) rejecting the applications filed by the assessees in Form No.10AB for registration u/s 12AB and 80G was issued and served on the assessee and the assessee filed appeals before the Tribunal.
By the time the assessee’s appeals came up for hearing before the Tribunal, registration was granted u/s 12AB and 80G of the Act by the Ld.CIT(E) and the grievance stood redressed. AR pleaded for withdrawal of the appeals for which the Ld.DR has raised no objection.
HELD THAT:- Since the assessee’s applications for registration u/s 10AB and 80G were considered and the assessee was granted registration u/s 12AB and 80G of the Act and the assessee pleaded for withdrawal of the appeals, we have no hesitation to permit the assessee for withdrawal of the appeals.
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2023 (9) TMI 1604
Estimation of income - Addition made u/s 69C - towards purchases made based on peak credit - assessee is a partnership firm and is involved in the business activity of trading in iron and steel - HELD THAT:- We notice that the SMC bench in assessee's own case for AY 2009-04 in the appeal filed against order of the assessing officer u/s 143(3) has held 4% of the gross turnover as an addition towards the bogus purchases by applying the ratio of JK Surface Coatings Pvt Ltd . [2021 (10) TMI 1323 - BOMBAY HIGH COURT]
From the perusal of the order of the coordinate bench it is clear that the issue of bogus purchases have already been considered under regular assessment. Accordingly in our view, there is merit in the contention of the AR that the initiation of reassessment is merely a change of opinion and that no addition can be made in the reassessment for the same purchases.
Considering the fact that the impugned purchases have already been considered during the assessment u/s 143(3) and that the SMC bench of the Tribunal has held 4% to be the GP rate that is to be applied on gross turnover for addition towards bogus purchases, we hold that the addition based on peak credit of purchases under section 69C in the assessment u/s 147 is not tenable.
Gross profit ratio in the alleged non genuine purchases - In assessee's case, it was submitted before the assessing officer that the alleged bogus purchases have been recorded in the books including the stock register and that the sales out of the said purchases have also been recorded as turnover. Therefore we tend to agree with the contention that the addition should be made based on the gross profit ratio. Considering the above decision of case of Mohammed Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] and the decision of the SMC bench in assessee's own case for AY 2009-10 we are of the view the percentage of GP considered while deciding the appeal for assessment year 2009-10 shall apply mutatis mutandis to this appeal also. Therefore we hold that a GP ratio of 4% to be applied on gross turnover as addition towards bogus purchases.
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2023 (9) TMI 1603
Addition being difference amount of agreement and sale deed - receipt recorded in ‘Ikrarnama’ for transfer of share of property of the assessee, which has been treated by the Assessing Officer as unexplained cash credit u/s 68 - HELD THAT:- Firstly, that no such cash payment was received by the assessee and the AO has made addition on presumption only.
In the instant case, handwritten record of receipt of the cash of Rs. 20 lakhs in assessment year 2011-12 and Rs. 5 lakhs in assessment year 2012-13, is clear evidence of receipt of the cash by the assessee. Below the receipt of amount in cash, the assessee has put his signature also. In such circumstances, the contention of the assessee that addition has been made on presumption basis by the Assessing Officer is rejected.
Assessee submitted that said ‘Ikrarnama’ was cancelled and it cannot be made the basis of the addition - We find that no cancellation agreement has been filed before the lower authorities in support of the contention, and therefore, contention of the assessee cannot be accepted without any supporting documentary evidence. Further, the Assessing Officer has made addition on the basis of the cash received in the handwritten jotting duly signed as appearing in the ‘Ikrarnama’.
Separate addition amount to double addition in the hands of the assessee as Assessing Officer had already made addition for the difference in the amount recorded in ‘Ikrarnama’ and Sale Deed - We find that in assessment year 2012-13, Assessing Officer made addition of Rs. 30 lakhs as difference amount of Rs. 90 lakh recorded in the ‘Ikrarnama’ and Sale Deed amount of Rs. 60 lakhs as income from other sources, however, the Ld. CIT(A) has deleted the said addition.
We find that Assessing Officer has made addition for amount of Rs. 25 lakhs on the basis of the handwritten entries signed by the assessee in the ‘Ikrarnama’, which is beyond the amount of Rs. 90 lakh. We find that the addition of Rs. 30 lakhs has already been deleted by the Ld. CIT(A) and therefore, this amount of Rs. 25 lakh cannot be set off against the said addition of Rs. 30 lakhs which was made by the Assessing Officer, but now deleted by the Ld. CIT(A).
Computation of the long-term capital gain - It is important that for the assessee to demonstrate that said amount of Rs. 30 lakhs was returned back to Shri Ashok Rohani. Though the assessee claimed to have paid interest to Shri Ashok Rohani, but paying interest itself can’t prove that said amount was returned. If the said amount is refunded or returned to Shri Ashok Rohani then cash amount received by the assessee would be within the limits of Rs. 90 lakhs as sale consideration for share of the assessee as per the ‘Ikrarnama’ and in that case, it can’t be treated as unexplained cash credit and it shall be treated as part of sale consideration of the property. But if the assessee fails in demonstrating the evidences as we have stated in above paragraphs, the addition shall be sustained. Though, the case is very old and the assessee is no more and represented by legal heir, in the facts and circumstances of the case, we feel it appropriate to restore the matter to the file of the Assessing Officer for limited verification as stated above and decide the issue accordingly. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard.
We may like to observe that in the ‘Ikrarnama’ under reference, members of ‘Tandon’ family other than assessee, have received cash amounts against sale of their share of property. We attempted to ascertain fate of their cases which could guide us as precedent in the matter, but no information was provided to us by either party. We have also noted that in body of order, the AO mentioned for rejection of deduction u/s 54 of the Act, however, ultimately in the computation, no addition has been made for resultant long-term capital gain.
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2023 (9) TMI 1602
Validity of reopening notice issued as barred by limitation - time taken by the ITBA e-mail software system to dispatch emails - as submitted notice which was impugned in the writ petition though bears a date and signature of the authority showing that it was signed on March 31, 2021 but was actually uploaded for communication after 31st March, 2021, which has to be treated as the date of issuance of the impugned notice - HELD THAT:- The time taken by the ITBA’s e-mail software system in triggering the e-mail and transmitting the said e-mails from the ITBA servers is attributable to the Department and, therefore, for the e-mails despatched on 1st April, 2021 or thereafter, the notices are held not to have been issued on 31st March, 2021. Thus, the appellant/revenue appears to have a wrong impression that the decision in Suman Jeet Agarwal [2022 (9) TMI 1384 - DELHI HIGH COURT] would substantiate their case. Thus, considering the facts and circumstances of the case, we have no hesitation to hold that the notice which has been impugned in the writ petition under Section 148 of the Act is barred by limitation and cannot be enforced. Decided against revenue.
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2023 (9) TMI 1601
Admissibility of an unregistered lease deed as evidence - recovery of possession and decree for mesne profit - default in payment of rent - HELD THAT:- The appeal of the Defendant was examined by the Division Bench of the High Court and on considering a large body of authorities, the High Court found no reason to interfere with the judgment of the Trial Court. The appeal was dismissed. It was the view of the High Court that the agreement being unregistered, the same could not be looked into for determining the rights and liabilities of the parties and for its duration. On the question as to whether the purpose of the lease was "manufacturing" or not, the High Court held that it was for the Appellant to establish that factor. The Appellant not having adduced any evidence in that regard, the High Court drew adverse inference on that count and the Trial Court judgment was not interfered with.
So far as Section 106 of the said statute is concerned, in which distinction is made between lease of immovable property for agricultural or manufacturing purpose and lease of immovable property for any other purpose, the same provides that a lease of immovable property for agricultural or manufacturing purpose shall be deemed to be a lease from year- to-year terminable by six months' notice. In other cases, termination would require fifteen days' notice. The subject agreement had a duration of five years with a provision for renewal for a further period of five years. Hence under the first part of Section 107, for the said lease agreement to be admissible, registration of the same would have been necessary. The deeming provision of Sub-section (1) of Section 106 so far the same related to lease for agriculture or manufacturing purpose would not be applicable as the deed was not registered. The Appellant has argued that the Trial Court had admitted the lease agreement in evidence, and for determining the purpose of lease, we can examine the deed. But this argument is flawed.
In Park Street Properties Private Limited v. Dipak Kumar Singh and Anr. [2016 (8) TMI 1447 - SUPREME COURT], which was cited in the case of Sevoke Properties [2019 (4) TMI 1887 - SUPREME COURT], it was observed that in the absence of a registered instrument, the courts are not precluded from determining the factum of tenancy from other evidence on record as well as the purpose of tenancy. In this case, factum of creation of tenancy has been established. But the purpose of tenancy, so as to attract the six months' notice period Under Section 106 of the 1882 Act cannot be established by such evidence as in such a situation, registration of the deed would have been mandatory. The onus would be on the Defendant to establish the fact that manufacturing activity was being carried on from the demised premises. A mere statement by the DW-1 to which we have referred earlier or the purpose of lease as specified in the lease agreement would not be sufficient to demonstrate the purpose of lease to be for manufacturing.
The High Court has not erred in law in dismissing the Defendant's appeal. The present appeal shall stand dismissed on the same rationale.
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2023 (9) TMI 1600
Declaration of dividend (final as well as interim) in its financial statements along with the provision for Dividend Distribution Tax - Applicability of Dividend Distribution Tax [ DDT] u/s 115O of The Income Tax Act or lower rate of tax in case of Non-Resident Assessee who are eligible for the benefit of Double Taxation Avoidance Agreement [ DTAA] - HELD THAT:- No provisions have been shown by the learned authorized representative wherein the domestic company is entitled to invoke the articles of double taxation avoidance agreement between India and the country of residence of non-resident shareholders. Of course, the non-resident shareholders can take benefit of the double taxation avoidance agreement if it benefits them, however Indian company cannot invoke provisions of double taxation avoidance agreement, as held by the special bench Therefore any attempt by the assessee to invoke the provisions of double taxation avoidance agreement is contrary to the decision of the special bench and therefore all those arguments deserves to be rejected which refers to the articles of double taxation avoidance agreement by the assessee i.e. an Indian company. Therefore, Indian company is deprived of referring to the Double Taxation Avoidance Agreement with respect to dividend distribution tax under section 115O of the act.
In view of various observations made with respect to the applicability of double taxation avoidance agreement, we dismiss the additional ground raised by the assessee.
Disallowance of payments made to Drs in alleged violation of Indian medical Council (professional conduct, adequate and ethics) regulations, 2002 (IMC regulations) - Payment made for customer gifts, brand reminders and medical books etc - Disallowance under section 37 (1) - HELD THAT:- Brand reminder is in the purchase of medical books and journals for the medical professionals are specifically covered under the gift prohibited by the rules of Indian medical Council. Nobody can deny that it is not a free be given by assessee to those doctors. We also find that the decision of the honourable Supreme Court in Apex Laboratories (P) Ltd. [2022 (2) TMI 1114 - SUPREME COURT] is a lot of land and decision is not at all narrow in its scope. Therefore, for this reason it needs to be applied to the facts of each case irrespective of its consequences
With respect to the claim of the assessee that purchase of medical books and journals are provided for dissemination of knowledge and education. There is no doubt about that that the profession of medical is always evolving. Therefore, the need of medical books and journals is imperative. Similarly is the purpose of attending conferences seminars et cetera by the Drs. We are also aware about the various clauses 1.2.2., 1.2.3. and 6.8.1 (g) of the IMC Regulations, wherein these are provided for. But those regulations does not provide that the Drs should accept freebies of books, journals, conference fees paid, seminar fees, registration charges, hotel charges et cetera paid by a pharmaceutical company.
Nobody denies that every profession should have a continuing education program but the cost of such a continuing education program should be borne by the professional himself and cannot be given as a free be by the other parties. The similarly, there is no bar in attending the conference and seminar purchasing books et cetera by the Drs, but footing of those bills defrayed by pharmaceutical companies is prohibited. Therefore, allowance of such expenditure in the hands of pharmaceutical company, which is required to be incurred by the Drs for their continuing professional education, is against the letter and spirit of the law as well as against decision of the honourable Supreme Court.
Undoubtedly, the decision of the honourable Supreme Court in case of Apex laboratories has strong binding precedent and serves as an authority on the facts with respect to the payment of freebies by the pharmaceutical companies and on all the legal issues arising out of such payment and its allowability in the hence of pharmaceutical companies. In view of this, we reverse the order of the learned and CIT – A deleting the disallowance on account of brand reminders and customer gifts and purchase of medical books and journals for the medical professionals i.e. doctors. Accordingly, ground number 1 – 3 of the appeal of the learned assessing officer is allowed.
Allowance of write-off of bad debts - only grievance of AO is that the deduction is allowed to the assessee without granting assessing officer and opportunity to consider the submissions made by the assessee during the appellate proceedings - HELD THAT:- We find that it is not the claim of the revenue that the allowance of writeoff of bad that is granted to the assessee by the learned first appellate authority is not sustainable in law. For the 11’s of bad debts the AO was directed to furnish remand report, it was furnished on 8/1/2018 as stated in paragraph number 8.1 of the learned CIT appeal’s order. Therefore, it is incorrect to say that no opportunity was available to the assessing officer for verification of the claim. In any case, when there is no grievance that the claim allowed to the assessee by the first appellate authority is easy in accordance with the law, we failed to understand what purpose it would achieve if the learned assessing officer is given and unfortunately once again. In view of this, we dismiss ground number 4 of the appeal.
Undisclosed income - difference between the AIR data of the assessee and the income shown by the assessee in its books of accounts - HELD THAT:- No doubt, difference between AIR data and books of account triggers the examination by the learned AO. However, when the assessee is helpless and unable to obtain confirmation from those parties, it is the duty of the assessing officer to issue notices under section 133 (6) of the act to those parties, which the assessing officer has done in this case also, but unless the information is received contrary to what assessee has stated, the addition cannot be made in the hence of the assessee. In view of this we set-aside ground number 1 of the appeal to the file of the learned assessing officer to examine if the response to those 133 (6) notices are showing any evidence contrary to what assessee has stated, assessee must be confronted with that, after hearing the assessee, the learned AO may decide the issue afresh. Accordingly, ground number 1 and 2 of the appeal are allowed.
Depreciation on Goodwill Arising from Amalgamation - DR submitted that there is no question of granting depreciation to the assessee over and above the assets acquired by the assessee from the target company - HELD THAT:- The surplus price paid by the purchaser is towards buying the goodwill of the business which is self generated. The valuation report also suggest that a sum of ₹ 6908 crores though classified as a goodwill is also including valuation of workforce, synergies, customer relationships, distribution network, vendor relationships, contacts et cetera. It also says that goodwill is primarily arise in also due to the future earning capacity of the business to generate profits and returns to the shareholders. Therefore it is not clear whether in the valuation of goodwill of ₹ 6908 crores there are any other intangible assets or it is purely goodwill. Though assessee has accounted for in the books of account ₹ 6908 crores as goodwill, however for the purpose of depreciation the accounting entries do not either supports the case of the assessee or goes against the assessee. However when the income tax act requires the cost of acquisition of the assets to be recorded at a particular price in a particular manner, regard shall be made to those specific provisions of the act.
In view of this, we set-aside the issue back to the file of the learned assessing officer to examine the actual cost of the goodwill, and if allowable in accordance with the law, to allow depreciation on it. The assessee is directed to show before the learned assessing officer that the claim of depreciation on goodwill satisfies the provisions of the income tax act, the learned AO may verify the same and decide the issue in accordance with the law. Needless to say, the proper opportunity of hearing is given to the assessee. In the result ground number 3 – 5 of the appeal of the assessee are allowed.
Claim of deduction u/s 35DD - assessee has incurred amalgamation expenditure being 1/5 of the expenditure on amalgamation incurred - HELD THAT:- Assessee has been granted deduction under section 35DD of the act with respect to all the expenditure which assessee supported by producing evidences in the form of invoices/vouchers/men that letter et cetera. However when the assessee has failed to produce the evidence of incurring the expenditure as well as the purpose for which it is incurred, we do not find any infirmity in the order of the lower authorities in denying the deduction to the assessee to that extent under section 35DD of the act. Accordingly ground number 6 of the appeal of the assessee is dismissed.
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2023 (9) TMI 1599
Validity of search - Petitioners state that the Revenue does not have the satisfaction note and hence the situation will be similar to that covered by the order that this Court passed [2023 (8) TMI 162 - BOMBAY HIGH COURT] and another - HELD THAT:- Even if the search is held to be invalid, the information or material gathered during the course thereof may be relied upon by Revenue for making adjustment to assessee’s income in an appropriate proceeding, if so advised, and Revenue may utilize the information or material in such proceeding, as is permissible in law.
ITAT is directed to dispose the pending Appeals in terms of this order within a period of twelve weeks from the date this order is filed in the Registry of ITAT. Petitions disposed.
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2023 (9) TMI 1598
Charges u/s 420 and 120-B of the IPC - malafide and dishonest intention on the part of the accused Company in connivance with officials of the department for evading countervailing duty and for getting wrongful gain - HELD THAT:- It is needless to say that so far as the allegation of conspiracy is concerned, it is very difficult to collect any direct evidence of conspiracy. From the material collected or the evidence adduced on record, inference of conspiracy is required to be drawn. The Investigating Officer has collected voluminous documentary evidences and evidence of the Intelligence Officers, the offence of evasion of CVD of 85% payable to the government on MRP of the products is noted. Merely because, subsequently in appeal the Customs Department has cleared the doubts and Company has subsequently paid the differential amount of CVD of Rs.1,51,45,378/- is not a ground to exonerate the applicant Company from the charges leveled against it as said proceedings are afterthought and amount paid after the raid conducted by the Customs Department. The said proceedings are initiated after closing of the present prosecution.
Before the date of receipt of the application under Section 32-K of the Central Excise Act, already prosecution came to be instituted. Hence, no such immunity can be granted and said act is nothing but afterthought i.e. not prior to complaint and said fact is also not disclosed before the authority hence, question of bonafide intention and debatable question of interpretation of Rules also does not arise considering peculiar facts of the case.
Even, the act on the part of the accused prima facie appears to be false. Section 23 of the IPC defines “Wrongful gain”, which provides that “wrongful gain” is gain by unlawful means of property to which the person gaining is not legally entitled and due to such act, wrongful loss is caused to the government for which government is legally entitled to recover dues. Thus, as per section 24 of the IPC, whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing “dishonestly”. Herein, only with intention of getting unlawful gain to company and to cause loss to government exchequer, act is committed.
Whether the defence raised by the present applicant is bonafide or not, all these aspects are required to be considered at the time of full-fledged trial as the learned Special Judge is satisfied that prima facie case is made out and there is sufficient material and evidence and ground for framing of charge and the Court has not gone into the merits of the case and considered on the basis of material on record that the accused is likely to be convicted or not. Hence, the order passed by the learned Special Judge does not call for any interference as at the time of framing of the charge, Court has not to weigh evidence and come to conclusion as to whether or not there is a possibility of recording conviction. Court has to only see as to whether there is sufficient ground or material against the accused based on which accused may be put to trial.
In view of the law laid down by the Hon’ble Apex Court in the case of P. Vijayan [2010 (1) TMI 1097 - SUPREME COURT], Ashok Kashyap [2021 (4) TMI 1299 - SUPREME COURT] and M.R. Hiremath [2019 (5) TMI 1986 - SUPREME COURT] and in view of the fact that on the basis of all the material on record, the learned Special Judge has satisfactorily come to conclusion that accused Company might have committed an offence so no any suspicion qua interpretation of Rules or provisions arise at this stage.
Hence, present criminal revision application stands dismissed. Resultantly, the impugned order dated dated 19.07.2017 passed by the learned Special Judge (CBI), Ahmedabad in CBI Special Case No.48 of 2010 is hereby confirmed. As the offence is registered way back in the year 2005, learned Special Judge, CBI Court, Ahmedabad is directed to expedite the trial preferably within a period of one year. Rule is hereby discharged.
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2023 (9) TMI 1597
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1596
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1595
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1594
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1593
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1592
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1591
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1590
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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2023 (9) TMI 1589
Eligibility for GST exemption on hostel accommodation services - 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? - HELD 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 house, campsite, lodge, house boat, or like places meant for temporary stay.
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 residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence.
It is clear that hostel accommodation is not equivalent to residential accommodation and hence the services supplied by the Applicant would not be eligible for exemption under Entry 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.
Requirement for GST registration based on turnover - HELD THAT:- It is clear that the Applicant's service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 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.
Taxability and applicable GST rate for hostel accommodation services - HELD THAT:- It is observed that 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).
Tax treatment of in-house food supply as part of hostel services - 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. 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.
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