TMI Blog2023 (11) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, camp - site, lodge, house boat, or like places meant for temporary stay - It is observed that 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 ic., hostel accommodation, thereby losing its status as residence dwelling and has become a business premises comparable to a hotel. The 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 ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmunicated. 2. In terms of Section 103(1) of the Act, this Advance ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- (a) on the applicant who had sought it in respect of any matter referred to in subsection (2) of section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. In terms of Section 103(2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments Act, 1947 to mean any premises in which business is carried on bonafide for the supply of dwelling accommodation and meals on payment of a sum of money to a traveller or any member of the public or class of the public ; Thus, the hostel accommodation which falls within the purview of the Hostels Regulation Act cannot be equated with that of a hotel accommodation which falls within the realm of Tamilnadu Shops Establishments Act, 1947 by any stretch of imagination. Under the erstwhile Service Tax regime, the services by way of renting of residential dwelling for use as residence was included in the negative list under clause (m) of Section-66D of the Finance Act 1994. Similarly, no VAT was leviable for supplying food to inmates, being an incidental activity to the activity of accommodation and relied on the Hon ble Andhra Pradesh High Court decision in the ease of Bharatiya Vidya Bhavan s Residential Public School v. State of Andhra Pradesh. Under the Exemption Notifications above mentioned, Entry No. 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 [similar entry: Entry 13 of Exemption Notification No. 9/2017- Integrated Tax-R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by the Central Board of Indirect Taxes Customs under the erstwhile Service Tax Regime has defined the term residential dwelling as: The phrase residential dwelling has not been defined in the Act. It is therefore to be interpreted in normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, Inn, guest house, campsite, house, lodge, house boat or like places meant for temporary stay. ; To understand the term dwelling house they rely on the decision of the House of Lords in appeal in the case of Uratemp Ventures Limited v. Collins (AP),[2001] UKHL 43 dated 11/10/2001. They rely on the decision of the Hon ble Karnataka High Court in the case of Taghar Vasudeva Ambrish -vs- Appellate Authority for Advanced Ruling, Karnataka, wherein the Hon ble High Court has held the identical question of law in favour of hostels and has held that the exemption available in Entry 13 of Exemption Notification No. 9/2017-Integrated Tax-Rate dated 28.06.2017 is available to a residential hostel/residential dwelling meant for students or working people. The hostels attached to educational institutions are exempt from GST and their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexure XVIII, wherein under the Residential Use Zone, Entry No.(vii) is given Working women s hostels, old age homes . The property tax receipts categorize hostels in residential zone only. The tenants living in these hostels often give the hostel address as their place of residence for procurement, verification or receiving government, bank or other similar official documents. Reliance is made on the following decisions:- i. The Hon ble Supreme Court in Para 11 of the judgment in Kishore Chandra Singh Vs Babu Ganesh Prasad Bhagat AIR 1954 SC 316 has held that expression residence only connotes that a person cats, drinks and sleeps at that place and it is not necessary that he should own it. ii. SC decision in Jagir Kaur Vs Jaswant Singh - Criminal appeal 143/ 1961 dated 13.02.1963 for the word reside . iii. Delhi High Court judgment dated 22.09.1976 in VL Kashyap Vs R P Puri for the word dwelling house or residential house . iv. SC judgment dated 25.03.1981 in Indo International Industries Vs Commissioner of Sales Tax for submission that in the absence of a definition in the Enactment, dictionary meaning/popular meaning can be resorte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Regulation Act. The rent received from the renting out or subletting of property is subject to Tax Deduction at Source. They are not deducting any TDS under section 194 I of the Income Tax Act. Hence, the claim of renting of residential dwelling for the use as residence become failure. 4.2. In addition to the above, the State Jurisdictional authority further stated that they are rendering services by way of renting of immovable property with a business motive for pecuniary benefit. These services are classified under Heading 9963 (Accommodation, food and beverage services). The services rendered by the applicant clearly falls under Entry No. 7 (ix) of the Notification No. 11 /2017 Central Tax (Rate) dated 28.06.2017 viz. Accommodation, food and beverage services other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above and the rate of tax to the services are the settled one as per rate notification. From the above analysis of the issue in the hands, the following rate of tax is to be levied for the services rendered by the applicant with effect from 01.07.2017 upto 29.09.2019. Sub-Heading DESCRIPTION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an what is commonly understood as residential accommodation. Hostel rooms are similar to rooms given by hotel, inn, guest house, club site or campsite, by whatever name called, or other commercial places which attract GST and are covered by different entries in the schedule of different notifications and this shows that rooms though given on rent for residential purposes would not amount to residential dwelling . Moreover, hostels even though given for residential or lodging purposes are commercial places registered as commercial establishments for the purposes of electricity, water, trade licence etc. Therefore, the applicant s hostel cannot be termed as residential dwelling and has to be treated as a commercial place only. 5.2. The Central Authority further stated that coming to the second condition of the entry in the notification, it needs to be mentioned that it is intended for residential dwellings which are rented out for use as residence. Assuming but not admitting that the applicant s hostel is a residential dwelling, the same has to be rented out for use as residence. Whereas in the facts of this case, it is rented out for use as a hostel facility or payin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Section 97(2) of the CGST/TNGST Act, out of the Questions 1 to 5 on which advance ruling is sought under the Act, Questions 1 to 4 fall within the scope of Section 97(2)(a), (b), (f) of the CGST/TNGST Act, 2017, and therefore the application is admissible for these Questions only. 6.3. The facts of the case as stated by the Applicant are that - they are running ladies hostel providing boarding and lodging facilities to students and working women. They are also providing certain ancillary services such as housekeeping, security arrangements, Television, parking facility etc. charges of Rs. 3000/- is being collected per inmate per month for providing all the above facilities including electricity charges; the charges collected are per bed charges and these charges are also dependent on number of persons sharing the room; the invoices to the habitants are raised accordingly. the premises used for providing these services are owned by the Applicant. 6.4. The Applicant claims that the immovable property being used for providing accommodation is a residential dwelling which is used as residence by the inmates and thereby the rent received on such accommod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an establishment which provides living accommodation to a specific categories of persons such as students workers. The Applicant has rented out the premises with the intention of providing hotel accommodation which is more akin to sociable accommodation rather than what is typically considered as residential accommodation. 7.1.5. Further, a house/ residential dwelling for occupation contain one or more rooms with one/part of the room being used as kitchen and the other/part as living room etc. But, in the instant ease, 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. Thus, on this count as well, the impugned accommodation thus provided docs not qualify as a residential dwelling and thus the question of using the same as residence docs not arise. 7.1.6. Regarding the second part of the description of service Tor use as residence it is observed that, though accommodation and residence seems to be synonymous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintain or conduct any hostel, lodging house or home for women and children except under, and in accordance with a licence granted under this Act . c) The Applicant has also submitted the following License/ Certificates for running Ladies Hostel;- i. Sanitary Certificate issued by the Department of Public Health and Preventive Medicine under the provisions of the Tamilnadu Public Health Act, 1939. ii. Trade licence issued by the Coimbatore City Municipal Corporation under the provisions of the Coimbatore City Municipal Corporation Act, 1981. iii. No objection certificate issued by the District Officer, Tamilnadu Fire and Rescue services. iv. Stability Certificate (Form A) issued by Charted Civil Engineer License issued under Food Safety and Standards Act, 2006, for food services. We find that the above provisions are not mandatory or applicable to a typically residential building or residence dwelling for use as residence , whereas it is mandatory for a hostel building. This also shows that hostel building cannot be considered as residential dwelling but a non-residential complex. 7.1.8. From the above, it is evident that the premises rented out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case. A judgment should be understood in the light of facts of the case. Also, decisions of those cases were not in the context of GST laws. Hence the various case laws cited by the Applicant is of no avail. 7.1.13. Further, exemption notification should be interpreted strictly. The Hon ble Apex Court of India has made this abundantly clear in the case of Commissioner of Customs(Import), Mumbai Vs. Dilip Kumar Company [2018 (361) E.L.T. 577 (SC)], while answering the question, what is the interpretative rule to be applied while interpreting a tax exemption provision/notification when there is ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied? held that:- 52. To sum up, we answer the reference holding as under:- (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent) condition 14 Heading 9963 Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent NIL NIL was omitted vide Notification No. 4/2022 dated 13.07.2022. Thus, in effect, from 13.07.2022, only services by way of renting of residential dwelling for use as residence are exempted from GST. 7.1.17. Hence, it is clear that 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-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. 7.2.1. Regarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Firstly, the service of providing hostel accommodation is not an exempt activity as discussed in the previous paras. It is seen from the submissions of the Applicant, that along with the provision of accommodation services, they are also providing food and certain other services to the inmates of the hostel for consolidated charges. Now it is pertinent to sec the definition of Composite Supply which is given under Section 2(30) of the GST Act :- Composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply . Therefore, the definition implies that a supply of goods and/or services will be treated as composite supply if it fulfils the following three criteria:- (a) Supply of two or more goods and services together. (b) Goods or services are naturally bundled, i.e. they are provided together ..... X X X X Extracts X X X X X X X X Extracts X X X X
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