TMI Blog2023 (12) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... ., on the whole as residence. Thus, a common understanding of the term residential dwelling is one where people reside treating it as a home. Moreover, renting of residential dwelling does not include amenities like food, housekeeping, or laundry etc., whereas, a hostel is that of 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. 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 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. Thus, on this count as well, the impugned accommodation thus provided does not qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant 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 service - 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, we hold that supply of hostel accommodation services (Tariff heading 9963) is taxable @ 9% CGST + 9% SGST under SI.No. 7(vi) of the above Notification 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. The applicant, M/s. Arputha Womens Hostel, SS Complex, 7 th Street Extension, Tatabad, Coimbatore -641012 (hereinafter referred to as The Applicant ), is unregistered with GST. The Applicant is running a ladies residential hostel for college students and working people. 2.1. The Applicant has submitted the copy of application in Form GST ARA 01 and also submitted a copy of challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 2.2. The Applicant submitted that they are providing best hostel facilities to college female students and also to working women as most of the students and working people travel far and wide from their remote villages. The total charges collected for lodging per student or per inmate is Rs. 5,520/- per month. They provide single room occupation, or double room sharing or dormitory style of accommodation and rates vary accordingly. 2.3. The Applicant s interpretation of law/facts in respect of the questions raised, they submitted the following that- They h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence NIL NIL Thus residential accommodation falls under the unconditionally exempt category. It is submitted that Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (and Entry 13 of Exemption Notification No. 9/2017- Integrated Tax-Rate dated 28.06.2017) and also the identical Entry in the identical Exemption Notification under TNGST Act, 2017 underwent an amendment in the year 2022 by virtue of Notification 15/2022-Central Tax (Rate) dated 30.12.2022 wherein an Explanation was inserted in Column-3 against Entry 12 which reads as follows: Explanation For the purpose of exemption under this entry this entry shall cover services by way of renting of residential dwelling to a registered person where the registration person is Proprietor of a Proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence and to such renting is on his own account and not that of the proprietorship concern. Thus, the inserted Explanation qualified only occupants/inmates who are registered persons for the purpose of reverse charge and the position rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 023, wherein Smt. Aparna Nandakumar, Advocate (Authorised Representative - AR) appeared for the Applicant and reiterated the submissions made in the application. She highlighted the difference between hostel and hotel. She stated that: The definition of hostel under Section 2(c) of the Tamil Nadu Hostels and Home for Women and Children (Regulation) Act, 2014 and also definition of home for women and children in Section-2 (d) of the said Act are available. The term residential hotel is defined in Section-2 (14) of the Tamil Nadu Shops Establishments Act, 1947, and by which hostel cannot be equated to hotel. The duration of stay in hotel is short and it is a temporary accommodation whereas the duration of stay in a hostel is for a long term. The hostel are run with a motive to provide safe residence to students and working women/men and charges collected are nominal; Food given is the same for all occupants and no choice in menu given. The definition of landlord is given under Section 2 (c) and definition of tenant is given under Section 2(n) of Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act, 2017 [TNRRRLT Act, 2017), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goddard Vs Martin Francis. viii. In Para 14 of Taghar Vasudcva Ambrish Vs AAAR, Karnataka and Ors, it is held that it is evident that the expression residence and dwelling have more or less the connotation in common parlance and therefore, no different meaning can be assigned to the expression `residential dwelling and it cannot be held that the same does not include hostels which are used for residential purposes by students or working women. 4.1. The Applicant s jurisdictional State Authority had submitted the following remarks in respect of the questions raised by the Applicant: The request of the applicant is not capable of compliance since: The motive of the Applicant is to run the ladies hostel against the CONSIDERATION and they have also admitted that they are receiving some amount for rendering accommodation and food services, which clearly falls under the ambit of definition of SUPPLY as provided in Section 7 of the TNGST /CGST-Act. The applicant registered under various acts to run its business. The act of the applicant covers under the definition of the term Business as per Section 2(17) of the TNGST /CGST Act which includes any trade, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c.c. 18% 4.3. Lastly, the State Jurisdictional Authority also opined that since the definition of Hotel accommodation was broadly expanded in the Notification No. 20/2019 Central Tax (Rate) dated 30.09.2019, wherein all the accommodation services including hostel accommodations services were brought into the tax net @12% and hence rate of tax for the hostel accommodation services may be taxable @ 12% with effect from 30.09.2019 onwards. 4.4. The Joint Commissioner (ST), Intelligence, Coimbatore has informed that no proceeding is pending in respect of the applicant. 5.1. The Applicant s jurisdictional Central Authority has submitted their remarks on the questions raised as under: Entry 12 of Exemption Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 covering Heading 9963 or Heading 9972 deals with Service by way of renting of residential dwelling for use as residence . The identical Notification under the TNGST Act, 2017 and Entry 13 of Exemption Notification No. 09/2017 - Integrated Tax (Rate) dated 28.06.2017 also cover the heading 9963 or Heading 9972 deals with Service by way of renting of residential dwelling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that since the supply rendered by the applicant is not an exempt supply being not eligible for exemption covered under the entry referred above, the applicant would be required to take registration as per the provisions of Section 22 of the CGST Act, 2017 provided that the aggregate turnover in a financial year exceeds twenty lakh rupees. 5.4. It was opined that in the event of requirement of registration, hostel accommodation service provided by the applicant will fall under Sr. No. 7 (i) under the heading 9963 (Accommodation, food and beverage services) i.e. Supply of hotel accommodation having value of supply of a unit of accommodation less than or equal to seven thousand five hundred rupees per unit per day or equivalent and will attract 12% GST with effect from 18th July, 2022 as per the Principal Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 20/2019 - Central Tax (Rate) dated 30.09.2019 and further amended by Notification No. 03/2022 - Central Tax (Rate) dated 13.07.2022. In the Notification No. 20/2019 - Central Tax (Rate) dated 30.09.2019, Hotel Accommodation means supply, by way of accommodation in hotels, inns, g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2017, and also under Entry 13 of Exemption Notification No. 09/2017-IT (Rate) dated 28.06.2017, as amended. The relevant Entry is reproduced here under: Sl.No. Chapter/Section/Heading /Group/ Service Code (Tariff) Description of Service Rate (%) Condition 1. Heading: 9963 or Heading 9972 Services by way of renting of residential dwelling for use as residence NIL NIL 7.1.2. Now, the fundamental issue to be discussed is 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. 7.1.3. In this regard, we observe 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 dwell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 ie., hostel accommodation, thereby losing its status as residence dwelling and has become a business premises comparable to a hotel. It is further observed that, there is no relationship of landlord and tenant between the hostel owners and inmates in as much as the inmates of hostels have no obligation to maintain or repair the fixtures and fittings and there is no division of maintenance responsibility between the hostel owners and inmates which is normally followed in the case renting of residential dwelling to a family or a person. Therefore, 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. 7.1.7. Further, we find that there are certain regulatory provisions for running hostels and licence/certificates are to be obtained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption. However, it is observed that Special Leave Petition (Civil) No. 29980/2022 has been filed against this order before the Hon ble Supreme Court of India and the case is pending disposal. 7.1.10. The Applicant has claimed that the buildings used as hostels are residential buildings as per the Zoning Regulations as stated in Rule 33 of the Tamil Nadu Combined Development and Building Rules, 2019. But we find that the eligibility to claim exemption is not solely dependent upon the zoning regulations. Even if the hostels are permitted in residential zone, it does not partake the character of the residential dwelling . The land used for the purpose of Zoning Regulations is not determinative factor to decide whether the impugned property is hostel or residential dwelling for the purposes of tax. Further, the Licenses and Certificates obtained by the Applicant under various enactments in Tamil Nadu, clearly leads to an inference that Hostel Buildings are considered only as commercial or public buildings and not as residential building. 7.1.1 1. The decision of the Hon ble Supreme Court, relied upon by the Applicant, in the matter of KISHORE CHANDRA SINGH VS BABU GANESH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Rohit Pulp and Paper Mills Ltd. v. Collector of Central Excise 1991 taxmann.com 73/ 1990 (47) ELT 491 (SC), that; in interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the Notification. All parts of it should be read harmoniously in aid of and not in derogation of that purpose . Therefore, in order to implement the notification, it is necessary to keep in mind the purpose and the objective of notification. The relevant portion of Notification No. 12/2017-CT (R), Dated 28-6-2017 is reproduced herewith: Sl.No. Chapter/Section/Heading /Group/ Service Code (Tariff) Description of Service Rate (%) Condition 12. Heading: 9963 or Heading 9972 Services by way of renting of residential dwelling for use as residence NIL NIL 7.1.15. From the above, we find that 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 individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 7.2.2. Thus, the Applicant is a supplier of services and therefore, in terms of Section 22 of the GST Acts, which states that: Every supplier of service shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees. Therefore, we hold that 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. 7.3.1. Regarding the third question raised by the Applicant, which pertains to the tariff heading and the rate of taxability of the supply of service, relevant entries in Notification No. 11/2017, Central Tax (Rate), dated 28.06.2017, as amended vide Notification No. 20/2019 -- Central Tax (Rate) dated 30.09.2019, is reproduced as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, they are also providing food and certain other services to the inmates of the hostel for consolidated charges. Now it is pertinent to see 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 in the normal course of business. 7.4.2. 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 accommoda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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