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2024 (5) TMI 1029 - AUTHORITY FOR ADVANCE RULING, TAMILNADUExemption 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.
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