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TMI Blog2023 (8) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... all render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. The applicant, M/s. Hifi Hostel, No.72, Tank street, Saravanampatty, Coimbatore 641 035 (herein after referred to as 'The Applicant'), is unregistered with GST. The Applicant is running a Men's 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 have taken the premises on rent and they further let it out for students and working people as hostel accommodation, as most of the students and working people travel far and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 15/2022-Central Tax (Rate) dated 30.12.2022 wherein an Explanation was inserted in Column-3 against Entry 12 which reads as follows: " о "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 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 28.06.2017 as also under the TNGST Act, 2017 and also under 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 ..... on 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], 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 build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pable of compliance since, * The motive of the Applicant is to run the Men's hostel against the CONSIDERATION and they have also admitted that they are receiving some amount for rendering accommodation and food services, which is 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 their 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for use as residence". The entries referred above have two essential conditions 1. Service by way of renting of "residential dwelling" and 2. Use of "residential dwelling" as a place 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 ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification Central 'Hotel No. 20/2019 Tax (Rate) dated 30.09.2019, Accommodation' means supply, by way of accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or - lodging purposes including the supply of time share usage rights by way of accommodation. 5.5. Further, they stated that the questions raised in the 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mal 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. 7.1.4. Generally, renting of residential dwelling involves letting out any building or part of the building by a lessor to a person or family (related persons) against a rent for using rooms which form part of a house as kitchen, bedroom, and living room etc., 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., where as, a hostel is that of an establishment which provides living accommodation to a specific categories of persons such as students & workers. The Applicant has taken the premises on rent 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 contains one or more rooms with one/part of the room being used as kitc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tamil Nadu under the respective enactments and the Applicant also submitted copies of such licences/certificates: , a) The Applicant has Submitted FORM D License issued by the Tahsildar, Coimbatore (North) wherein as per section 2 of the THE TAMIL NADU PUBLIC BUILDING (LICENSING) ACT, 1965, 'hostel is deemed to be a public building' and as per Section 3, 'No building shall be used as a public building without a license and except in accordance with the terms and conditions specified therein'. b) The Applicant has also submitted the following License/ Certificates for running Men's 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 ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 7.1.11. The decision of the Hon'ble Supreme Court, relied upon by the Applicant, in the matter of KISHORE CHANDRA SINGH VSBABU GANESH PRASAD BHAGAT AIR 1954 SC 316 is not applicable to the present issue. The observation of the Hon'ble Supreme Court in the said decision, that "Residence only connotes that a person cats, drinks and sleeps at that place and it is not necessary that he should own it", appear to have been made in the context of the Indian Registration Act, 1908, while dealing with the issue of permanent residency and temporary residency. This is not the issue involved here. Further, this decision is not at all helpful in understanding the phrase "Residential Dwelling for use as residence" 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 individuals and the benefit of exemption is not extended to the premises which do not qualify as residential dwelling for use as residence. Further, unless the twin conditions of 'renting of residential dwelling' for 'use as residence,' being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally 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. 7.1.16. Further, it is observed that Entry at Sl.No. 14 of Notification No. 12/2017- CT (R), Dated 28-6-2017: 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. Sl. No. Chapter/Section/Heading/Group or Service Code (Tariff) Description of Service Rate (% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scription of Service Rate (%) Condition 7 Heading 9963 (Accommodation, food and beverage services) [(i) 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. 6 (ii) Supply of 'restaurant service'...... 2.5 (iii) Supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms 2.5 (iv) Supply of 'outdoor catering..... 2.5 (v) Composite supply of "outdoor catering" together with renting of premises..... 2.5 (vi) Accommodation, food and beverage services other than (i) to (v) above 9 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 eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posite supply, the tax rate on the principal supply will be treated as the tax rate on the given composite supply. We hold that 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. 7.5. Regarding the fifth question raised by the Applicant, no ruling could be issued as the question put forth by the Applicant does not fall under the scope of Section 97(2) of the GST Act. In view of the above position, we give the following ruling; RULING For Question No. 1: The services by way of providing hostel accommodation supplied by the Applicant are not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 and under the to 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. For Question No. 2: 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. For Q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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