Appellate Authority Upholds Tax Classification for Services: Exemption Deemed Inapplicable

The Appellate Authority upheld the classification of services provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited and by the building owner to Sri DMS Hospitality Private Limited under SAC 997212, subject to tax under entry no. 16 of Notification No. 11/2017 - Central Tax (Rate). The exemption under Notification No. 12/2017-Central Tax (Rate) for renting residential dwellings was deemed inapplicable as the premises were not for residential use. Additionally, the EMI charged and security services provided were found taxable under the CGST Act. The appeal by Sri DMS Hospitality Private Limited was dismissed.

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Issues Involved:
1. Classification of service provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited.
2. Classification of service provided by the building owner to Sri DMS Hospitality Private Limited.
3. Applicability of GST Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 on the services provided.
4. Applicability of GST on EMI per month charged from Sodexo Food Solutions India Private Limited and security services provided.

Detailed Analysis:

1. Classification of Service Provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited:
The Appellate Authority upheld the AAR's ruling that the service provided by Sri DMS Hospitality Private Limited to Sodexo Food Solutions India Private Limited is classified under SAC 997212. This classification is liable to tax under entry no. 16 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.

2. Classification of Service Provided by the Building Owner to Sri DMS Hospitality Private Limited:
The service provided by the building owner to Sri DMS Hospitality Private Limited is also classified under SAC 997212 and is similarly liable to tax under entry no. 16 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.

3. Applicability of GST Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017:
The Appellant contended that the service should be exempt from GST under Notification No. 12/2017-Central Tax (Rate) as "services by way of renting of residential dwelling for use as residence." However, the Authority found that the premises rented by the owner to the Appellant and subsequently sub-leased to Sodexo Food Solutions was not a residential dwelling. The building was located in an industrial area and was intended for industrial purposes, not residential use. Therefore, the exemption under Notification No. 12/2017-Central Tax (Rate) was not applicable.

4. Applicability of GST on EMI per Month Charged from Sodexo Food Solutions India Private Limited and Security Services Provided:
The EMI charged for additional facilities provided by the Appellant to Sodexo Food Solutions was considered a supply of goods under clause 1(c) of Schedule II to the CGST Act. This supply is liable to tax at the rate applicable to each of the goods supplied at the time of delivery. The security services provided were classified under SAC 998529 and are taxable at 18% GST under entry 23(ii) of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.

Order:
The Appellate Authority upheld the Advance Ruling No. KAR/ADRG 86/2019 dated 25-09-2019 and dismissed the appeal filed by M/s. SRI DMS HOSPITALITY PRIVATE LIMITED on all counts. The delay in filing the appeal was condoned suo moto in the interest of justice.

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