2019 (9) TMI 1046 - AAR - GST

Hotel Accommodation Arrangement Service Classified Taxable under GST Act

The Applicant's application regarding the classification of services provided when arranging client accommodation in hotels was found admissible under the ... Tour operating service - accommodation service - support services - classification under SAC 998552 - input tax credit - Rate Notification Sl No. 23(iii)Tour operating service - Arranging only clients' accommodation in hotels is not to be classified as a tour operating service. - HELD THAT: - The Authority found that the essence of a tour operating service is planning, scheduling, organising and arranging tours by any mode of transport. While arranging accommodation may be an ancillary add on to a tour, it does not constitute the core activity of tour operation. Many tour operators bulk book hotel rooms and may release them separately, and arranging accommodation as a standalone service cannot be equated with tour operating. Accordingly, the Applicant's activity of arranging only accommodation is not classifiable as tour operating service. [Paras 4]Arranging accommodation only is not a tour operating service.Accommodation service - SAC 996311 - The Applicant's activity of arranging hotel accommodation is not an accommodation service as classified under SAC 996311. - HELD THAT: - The Authority observed that SAC 996311 is limited to accommodation services provided by hotels, guest houses and similar establishments themselves. The narration of Sl No. 7 of the Rate Notification refers specifically to the accommodation service as classified under that SAC and does not extend to intermediary suppliers who merely arrange accommodation in hotels. Therefore the Applicant, who arranges accommodation rather than operating the hotel accommodation itself, does not fall within SAC 996311. [Paras 4]The Applicant's arranging accommodation service is not classifiable under SAC 996311.Support services - classification under SAC 998552 - Rate Notification Sl No. 23(iii) - input tax credit - The Applicant's service of arranging hotel accommodation is classifiable under SAC 998552, taxable under Sl No. 23(iii) of the Rate Notification, and the Applicant is eligible to claim input tax credit as admissible under law. - HELD THAT: - The Authority noted that the support services enumerated in Sl No. 23(iii) include services falling under SAC 998552, which specifically cover arranging reservations for accommodation domestically and abroad. The Applicant's supply-limited to arranging clients' accommodation-fits within that description and is therefore specifically covered by SAC 998552. Having classified the supply under Sl No. 23(iii) of the Rate Notification, the Authority concluded it is taxable accordingly and the Applicant can claim input tax credit as permitted by the law governing such taxable supplies. [Paras 4]Service is classifiable under SAC 998552, taxable under Sl No. 23(iii), and input tax credit is admissible.Final Conclusion: Where a tour operator arranges only clients' accommodation in hotels, that supply is not tour operating service nor hotel accommodation under SAC 996311, but is a support service classifiable under SAC 998552, taxable under Sl No. 23(iii) of the Rate Notification, and the supplier is eligible to claim input tax credit as admissible under law. Issues:1. Admissibility of the Application2. Classification of service provided by the Applicant when arranging client accommodation in hotelsAdmissibility of the Application:The Applicant, a tour operator seeking a ruling on the classification of services provided when arranging client accommodation in hotels, is found to have raised admissible questions under section 97(2)(a) & (d) of the GST Act. The Application is admitted as the issues raised are not pending or decided elsewhere under the GST Act, and there are no objections from the Revenue.Classification of Service Provided:The Applicant argues that the service of arranging accommodation in hotels should not be classified as tour operating service under the Explanation to Sl No. 23(i) of the Rate Notification, as it does not include transportation required for tours. The Applicant contends that the service falls under SAC 996311 and is covered by Sl No. 7 of the Rate Notification, which allows for suppliers like the Applicant who arrange accommodation in hotels.The Revenue, however, classifies the service under SAC 9985 as a tour operating service procured from another tour operator, based on the bills indicating charges inclusive of accommodation and transportation for tours.The Authority finds that the Applicant's service of arranging accommodation in hotels does not qualify as a tour operating service as per the Rate Notification. It is not classified under SAC 996311 for accommodation services provided by hotels and is instead covered under SAC 998552 for arranging reservations for accommodation services, making it taxable under Sl No. 23(iii) of the Rate Notification. The Applicant is eligible to claim input tax credit under the law for services classified under SAC 998552.In conclusion, the ruling states that if the Applicant arranges accommodation in hotels for clients only, the service is classified under SAC 998552, taxable under Sl No. 23(iii) of the Rate Notification, and allows for the Applicant to claim input tax credit as per the law.This ruling remains valid unless declared void under the provisions of the GST Act.