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TMI Blog2021 (8) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Henceforth for the purposes of this Advance Ruling, the expression GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions made by the applicant are as under:- 2.1 M/s. Ghodawat Eduserve LLP, the applicant situated at Gat No.584, Kolhapur Sangli Highway, Atigre, Kolhapur is registered under the CGST Act, 2017 having GSTIN 27AANFG4895LZJ and provides commercial training and coaching service for students appearing for 11th and 12th standards who are desirous of appearing for IIT, etc., specifically in science stream. 2.2 Applicant is also providing hostel facility to the students on demand basis and charging them additionally. The service of hostel is optional and not coining in the form of package. The hostel provides basic residential facilities, required to stay and study which include well-maintained furnished residence, Light, water, etc. and in consideration, hostel is charges a nominal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the parameters of Residential Dwelling. In addition to this, the hostels are normally for longer stay say - a year. 2.7 The exemption given in Sr. No. 12, is similar to relaxation available in service tax regime as well. The exemption was introduced by the Government under GST, as it is, even without altering single word in the entry. The only difference is that, the relaxation from Service Tax was given to the "services by way of renting of residential dwelling for used as residence" by including it into the negative list i.e. Clause (m) of Section 66D of Finance Act, 1994; whereas the said service is exempted under GST by issuing the notification under section 11 of CGST / SGST Act 2017. 2.8 Hence it can be concluded that the nature of residential accommodation expected under Sr. No.12 is long term accommodation other than the stay in lodging, hotels, etc. which are mainly meant for temporary or short term accommodation. Therefore, stay in hostel is covered by Sr.12 of Notification No. 12/2017-C.T. (Rate) mentioned above and hence not liable for GST. 2.9 Under Sr. No.14 exemption of the same notification, exemption is available for Services by a hotel, inn, guest house, clu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larification, CBEC has considered both hostel and hotel are one and the same and accordingly concluded that the exemption under Sr. No.14 of Notification No. 12/2017-C.T (Rate) dated 28.06.2017 is also available to hostels. APPLICANT SUBMISSION DATED 19.08.2021:- 2.16 The term 'residential dwelling' is not defined in CGST Act, 2017. So, the dictionary meaning of the same is referred to. As per the Oxford dictionary: 'A house or an apartment or other places of residence or a place to live in or building or other places to live in'. As per Webster dictionary: 'A shelter (as a house) in which people live '. As per Black's Law Dictionary: 'Residential dwelling means living in a certain place permanently or for a considerable length of time' 2.17 The term 'residence' is also not defined in CGST Act, 2017 which talks about "usual place of residence" under clause 113 of Section 2, which says : in case of an individual, the place where he ordinarily resides. Further, as per the Oxford dictionary: residence is The state of living in a particular place'. As per Webster dictionary: residence means: The act or fact of living or regularly staying at or in some place for the discharge of a du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. The dwelling unit rented to 11/11s Larsen & Turbo was a flat in the housing complex named South City. It was held that, the Applicant 's service was classifiable as rental or leasing service involving own/leased residential property. "Applicability of SI No. 12 of the Exemption Notification depends upon whether the dwelling unit is used as residence. It appears from the documents produced that all the above dwelling units are being used for residence, irrespective of whether they are let out to individuals or a commercial entity". Whereas in a contradictory pronouncement of AAR Karnataka, which was further affirmed by AAAR Karnataka, in case of Sri. Taghar Vasudeva Ambrish the letting out of premises to lessee to be further sub leased out for the purpose of residential use was not considered as eligibility under the said notification and considered to be a commercial use by the lessee. In the subject case the supply of services is directly used for residence purpose by the students and not for sub leasing or any other purpose and hence qualifies for exemption the Entry Number 12. 2. GST AAR Chhattisgarh in case of Kamal Kishor Agarwal Ramnath Bhimsen Charitable Trust (STC/A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily rates artificially for rate comparison to fix taxability of such service charged on monthly/ yearly basis that too for residential purpose. 4. Another indication is that in the cases of Hostels, as the stay may be for the year etc., the inmates staying there can afford to even furnish their address of stay to the local/Civic/Transport/Bank authorities for obtaining certificates/ opening of bank account/Cell phone Sim cards etc, which is not the case for Hotels/ Lodging etc. 2.26 So, conclusively categorizing Hostel & Hotels/ Inns/ Guest Houses etc. in the same bucket of exemption would be little absurd when categorically there is a specific exemption provided for the purpose of residential use for a relatively longer duration of stay. The principle of Strict Interpretation applies only to general exemption notifications, There are other exemption notifications, with a beneficent objective in mind. Such exemptions would require to be interpreted differently, and in a liberal manner by the Revenue since the purpose I intention behind such exemptions is not to exempt from the levy of tax on any legal basis, but to incentivize the subject/assessee as a policy measure. In a welco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or a family, consisting of Kitchen, Bathroom, Toilet, Rooms and other amenities required for day-to-day living purpose under agreement. Similarly, Hostel is also not defined anywhere in the law, but, hostel and hostel rooms means a building owned by a private or Educational Institution built in a such way that one room may be acquired by one or two students who are attached to the educational institute. These rooms do not have amenities and no families of students are allowed to live in the rooms. A hostel room has amenities like a bed, table, cupboard, chair etc. 3.3. The tax payer is claiming that the said services are exempted under Sr.No.12 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. The tax payer is drawing comparison between hostel facility provided to students and renting of residential dwelling for use as residence which is exempted under said notification. 3.4 It is to submit that the hostel facility is attached to/is part and parcel of the Commercial Educational Institute run by the tax payer for which the GST Registration is obtained. The hostel facility though optional as stated by the tax payer is available only to the students who have enro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this matter. We have heard both the sides. 05. OBSERVATIONS AND FINDINGS: 5.1 We have perused the records on file and gone through the facts of the case and submissions made by both, the applicant as well as the department. The subject matter is related to interpretation of the Notification entry and the whether the subject activity carried out is exempt or not. 5.2 Applicant is providing commercial training and coaching service to students appearing for 11th and 12th standards desirous of appearing for IIT, etc. Applicant provides hostel facility to such students on demand basis and charges them additionally. The service of hostel is optional and is not in the form of a package. 5.3 The hostel provides residential facilities which include, well-maintained furnished residence, Light, water, etc. and in consideration, the hostel is charging a nominal lump-sum fee of Rs. 34,000/- per year per student, which comes to Rs. 95/ (Approximately) per day. The hostel is also available for the students of the nearby schools. 5.4 Applicant has submitted that the exemption is available for their services under Sr. No. 12 of Notification No. 12/2017- C.T.(Rate) dated 28.06.2017, as amende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer has contented that, "Residential Dwelling' means a house given on rent to a person or a family, consisting of Kitchen, Bathroom, Toilet, Rooms and other amenities required for day-to-day living purpose under agreement. Similarly, Hostel is also not defined anywhere in the law, but, hostel and hostel rooms means a building owned by a private or Educational Institution built in a such way that one room may be acquired by one or two students who are attached to the educational institute. 5.8 We find from the submissions that, the applicant is providing hostel facility to the students on demand basis and charging them Rs. 34,000/- per annum (Rs. 95/-(approx.) per day per room), in addition to coaching fees. The activity of providing the hostel on the rent to various students is covered under 'services'. The hostels are exclusively meant for temporary residence for students during the time period of training and coaching only. The applicant is also providing hostel facility to the students who are not their own institutional students i.e. to the students of the schools nearby. The Applicant has submitted that kitchen facility is not provided in the allotted room and the stude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To decide the present issue, we also make reference to the clarification issued by the Tax Research Unit vide Circular No. 32/06/2018-GST dated 12th February 2018, the relevant part of which is reproduced as under:- Sr.No. Issue Clarification Clarification 1. Is hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus, exempt under SI. No. 1 of notification No. 12/2017-CT (Rate). Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of notification No. 12/2017-CT (Rate). However, 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 are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. [SI. No. 14 of notification No. 12/2017-CT(Rate) refers] 5.12 In view of the above mentioned clarification, we are of the opinion that, the hostel accommodation provided by applicant to students is not covered by exemption Notification En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... students, the hostel fees are not included in the training/coaching fees collected from the students. In fact the hostel fees are not a part of any package concerning commercial training and coaching services rendered by the applicant. The decision is being made in this order taking into consideration the said submissions made by the applicant. 06. In view of the above discussions, we pass an order as follows: ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) No. GST-ARA-72/2019-20/B-51 Mumbai, dt. 27.08.2021 For reasons as discussed in the body of the order, the questions are answered as under: - Question 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 Rs. 1000/-)? Answer: - Answered in the affirmative. Question 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) dated 28/06/2017 as amended time to time). Answer:- The present activity of the applicant is exempted under Serial Number 14 of ..... 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