Accommodation exemption depends on declared tariff threshold and whether ancillary services form part of the exempt supply.
Accommodation services supplied by hotel-like establishments qualify for exemption when the declared tariff per unit is below the prescribed threshold of Rs. 1,000 per day or equivalent, including monthly arrangements where the per-day equivalent remains below that limit. The ruling also distinguishes composite accommodation packages from separately supplied ancillary services: extra facilities remain exempt only if they form part of the exempt accommodation supply, while independently supplied non-exempt services are taxable unless they themselves fall within the relevant exempt classification. The tariff structure and the character of the supply therefore determine exemption availability.
Issues: (i) Whether daily accommodation services charged at Rs. 300 to Rs. 500 per bed are eligible for exemption under the exemption notification; (ii) Whether monthly accommodation services charged at Rs. 6,900 to Rs. 12,500 per bed are eligible for exemption under the exemption notification; (iii) Whether additional charges for extra facilities, when the overall price remains below the exemption threshold, affect the availability of exemption.
Issue (i): Whether daily accommodation services charged at Rs. 300 to Rs. 500 per bed are eligible for exemption under the exemption notification.
Analysis: The accommodation supplied was found to be residential or lodging service by a hotel, inn, guest house, hostel, camp or similar establishment. The declared tariff per unit of accommodation was below the threshold of Rs. 1,000 per day or equivalent. The service was treated as falling within the exemption entry applicable to such accommodation services.
Conclusion: The issue is answered in favour of the assessee and the daily accommodation services are exempt.
Issue (ii): Whether monthly accommodation services charged at Rs. 6,900 to Rs. 12,500 per bed are eligible for exemption under the exemption notification.
Analysis: The monthly tariff, when converted to a per-day equivalent, remained below the prescribed threshold. The supply therefore continued to satisfy the condition of declared tariff below Rs. 1,000 per day or equivalent, attracting the exemption for accommodation services.
Conclusion: The issue is answered in favour of the assessee and the monthly accommodation services are exempt.
Issue (iii): Whether additional charges for extra facilities, when the overall price remains below the exemption threshold, affect the availability of exemption.
Analysis: The ruling distinguished between bundled accommodation supplied as a composite supply and additional services supplied independently. Where the accommodation remained the principal supply and the total tariff stayed below the threshold, the package continued to fall within the exemption. However, independently supplied ancillary services were taxable unless they themselves fell within the relevant exempt group of services under the notification structure.
Conclusion: The issue is answered partly in favour of the assessee: ancillary services forming part of the exempt group remain exempt, while independent non-exempt services are taxable.
Final Conclusion: The accommodation tariff structure qualified for exemption, and the treatment of extra facilities depended on whether they formed part of the exempt accommodation package or constituted separate taxable supplies.
Ratio Decidendi: Accommodation services by hotel-like establishments are exempt when the declared tariff per unit is below the statutory threshold, and separately supplied ancillary services are to be taxed independently unless they fall within the exempt service classification.
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