TMI Blog2024 (5) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... lly 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 - Hence, 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-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 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 boarding and lodging per student or per inmate is Rs. 8000/- 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 have licence to run the residential hostel for boarding and lodging under Section 5 of the Tamilnadu Hostels and Home for Women and Children (Regulation Act, 2014) [hereinafter referred to as the Hostel Regulation Act ]. Section 2(e) of the Hostels Regulation Act defines Hostel or Lodging House to mean a building in which accommodation is provided for women or children or both either with boarding or not. The term Home for Women Children is defined in Section 2(d) to mean an institution, by whatever name called, established or maintained or intended to be established or maintained for the reception, care, protection for welfare of women or children or both ; On the other hand, the term residential hotel is defined in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 remained the same when inmates were unregistered persons; Thus, in the case of the applicant herein, the occupants or the inmates of the residential hostel are either students or working women are not registered persons under the GST Enactments. Thus, in such an event, the exemption that is available under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 as also under the TNGST Act, 2017 and also under Entry 13 of Exemption Notification No. 9/2017-Integrated Tax (Rate), dated 28-6-2017 is applicable on all fours to the applicant herein, irrespective of the threshold limit. The term residential dwelling is not defined under the CGST Act, 2017/TNGST Act, 2017. Para-4.1 3.1 of the Taxation of services an education guide dated 20-6-2012 which was issued 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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], from which it can be gathered that the term tenant includes sub-tenant also. Thus, if the applicant is a tenant, then the hostel inmates are sub-tenants and come within the ambit of tenants . Further, Section 3 of TNRRRLT Act, 2017, specifies bar on some categories of institutions wherein this Act is not applicable; Hostels do not come under this barred list and hence TNRRRLT Act is applicable to hostels also; therefore, the agreement between a hostel owner (he be an owner of the premises or a tenant himself) and the hostel inmates is a tenancy as per TNRRRLT Act, 2017. 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 and are specified in Annexure 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; The applicant is a service provider whereas they have referred the case law in respect of TNVAT Act which does not include the services but dealt with only goods. Their services does not fall under SERVICES BY WAY OF RENTING OF RESIDENTIAL DWELLING FOR USE AS RESIDENCE since they are letting out a single room to various inmates for various time period for a pecuniary benefit. In this type of transactions, they are not entering any rental agreement with the inmates for the transfer of rights of the specified place for a specific period and hence it does not cover the definition of residence which is controlled by the Tamil Nadu Rent 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of residence. For the applicant s hostel to be eligible for exemption under the above mentioned entries, both the conditions should be satisfied. It is opined that with respect to the condition 1, the term residential dwelling is one where people reside treating it as a home or abode. Whereas a common understanding of a hostel is an establishment which provides inexpensive accommodation to persons like students, workers etc. The applicant s hostel has been constructed with the intention of providing hostel accommodation which is more akin to sociable accommodation rather than 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application are not pending or has not been decided in any proceedings in the case of the applicant as per the Centre s record. Discussion and findings : 6.1 We have considered the submissions made by the applicant in their application for advance ruling and the submissions made by their AR during the course of personal hearing and additional submissions made thereon with reference to the issues involved and relevant facts. 6.2 Before moving further, we have to determine the admissibility of the application. In terms 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. 8,000/- is being collected per inmate per month for providing all the above fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidence. 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 and 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 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 qualify as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form III licence issued by the District Collector, wherein, as per Section 4 of the Tamil Nadu Hostels and Homes for Women and Children (Regulation) Act, 2014, No person shall, on and after the commencement of this Act, establish, 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 Chartered 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned in the exemption notification. 7.1.12 We find that the judgments cited by the applicant are not applicable to the present case, as the facts of those cases are entirely different from the 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 v. Dilip Kumar Company [2018 (361) E.L.T. 577 (S.C.), 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 exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 13-7-2022. Thus in effect, from 13-7-2022, 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-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. 7.2.1 Regarding the second question raised by the applicant, from the previous discussions, 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-C.T. (Rate), dated 28-6-2017 as amended, the applicant is ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Sl. No. 7(vi) of the above Notification [Sl. No. 7(ix) as per original notification]. 7.4.1 Regarding the fourth question raised by the applicant, which is 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. 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 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 combinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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