2021 (8) TMI 1230 - AAR - GST

Hostel accommodation for students exempt from GST under specific criteria.

The Authority for Advance Ruling (AAR) determined that the activity of providing hostel accommodation to students by the applicant is exempt from GST ... Services by way of renting of residential dwelling for use as residence - Services by a hotel, inn, guest house, club or campsite for residential or lodging purposes - Interpretation of the phrase 'residential dwelling' - CBIC Circular No. 32/06/2018-GST - treatment of hostel accommodationServices by way of renting of residential dwelling for use as residence - Interpretation of the phrase 'residential dwelling' - Whether the applicant's hostel accommodation qualifies as 'renting of residential dwelling for use as residence' and is therefore exempt under Serial Number 12 of Notification No. 12/2017-C.T.(Rate). - HELD THAT: - The Authority analysed the factual features of the hostel - rooms allotted on a sharing basis to students, absence of individual kitchen facilities in allotted rooms, food provided through a mess, restrictions on family/guest stay, and tenure tied to the period of training - and contrasted these with commonly understood attributes of a residential dwelling (freedom to have family/guests, self-contained kitchen and amenities, tenant-like rights). On this basis the Authority found that the common parlance test for 'residential dwelling' is not satisfied by the hostel accommodation in the present facts. Reliance on cases and dictionary meanings was considered but the Authority emphasised the factual distinctions which lead to the conclusion that the service does not fall within the scope of Serial Number 12. [Paras 5]The applicant's hostel accommodation does not qualify as 'renting of residential dwelling for use as residence' and Serial Number 12 of Notification No.12/2017-C.T.(Rate) is not applicable.Services by a hotel, inn, guest house, club or campsite for residential or lodging purposes - CBIC Circular No. 32/06/2018-GST - treatment of hostel accommodation - Whether the applicant's hostel accommodation is exempt under Serial Number 14 of Notification No.12/2017-C.T.(Rate) (i.e., services by hotels/inns/guest houses/etc. for residential or lodging purposes where declared tariff/value per unit of accommodation is below Rs.1000 per day). - HELD THAT: - The Authority observed that Entry No. 14 is user based and covers services by establishments 'by whatever name called' for residential or lodging purposes if the declared tariff or value of a unit of accommodation is below the prescribed threshold. The term 'hostel' being omitted specifically does not preclude coverage because 'by whatever name called' captures such arrangements. The applicant charged a nominal lump sum which, when reckoned per student per day, is below the threshold of Rs.1000; the Authority further placed weight on the CBIC clarification (Circular No.32/06/2018-GST) which expressly treats hostel accommodation (where the declared tariff per unit is below the threshold) as falling under the Entry No.14 exemption. Having considered the factual material and the circular, the Authority held that the applicant's hostel service satisfies the conditions of Entry No.14 and is therefore exempt. [Paras 5]The applicant's hostel accommodation is exempt under Serial Number 14 of Notification No.12/2017-C.T.(Rate) as the per unit/day value is below the specified threshold.Final Conclusion: The Authority answered the reference in the affirmative: the hostel services provided by the applicant are exempt from GST, and the exemption is to be claimed under Serial Number 14 of Notification No.12/2017-C.T.(Rate). Issues Involved:1. Whether the activity of providing hostel accommodation to students is exempt from GST.2. If exempt, whether the exemption falls under Serial Number 12 or Serial Number 14 of Notification No. 12/2017-Central Tax (Rate).Issue-Wise Detailed Analysis:1. Exemption of Hostel Accommodation from GST:The applicant, M/s. Ghodawat Eduserve LLP, provides hostel facilities to students at a nominal fee of Rs. 34,000 per year, which is approximately Rs. 95 per day. The applicant contends that this service should be exempt under GST Notification No. 12/2017-Central Tax (Rate).The term 'residential dwelling' is not defined in the GST Act. The applicant interprets 'residential dwelling' to include hostels, based on common parlance and judicial interpretations, arguing that hostels provide long-term residential accommodation similar to residential dwellings.The concerned officer argues that hostel facilities, unlike residential dwellings, are temporary and exclusive to students of the educational institution, lacking the permanence and amenities (like kitchens) typical of residential dwellings.2. Applicability of Serial Number 12 or Serial Number 14 of Notification No. 12/2017-Central Tax (Rate):The applicant asserts that the hostel services should be exempt under Serial Number 12, which exempts 'Services by way of renting of residential dwelling for use as residence.' They argue that hostels fit within the definition of residential dwellings and thus should qualify for this exemption.The concerned officer, however, contends that hostels do not meet the criteria for residential dwellings as they are meant for temporary student accommodation and do not provide the same rights and amenities as residential dwellings.The Authority for Advance Ruling (AAR) examined both Serial Number 12 and Serial Number 14 of the notification. Serial Number 14 exempts '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.'The AAR concluded that the hostel accommodation provided by the applicant does not qualify as a 'residential dwelling' under Serial Number 12 due to its temporary nature and restrictions on use. Instead, it falls under Serial Number 14, as the hostel provides lodging services at a rate below Rs. 1000 per day.Conclusion:The AAR ruled that the activity of providing hostel accommodation to students by the applicant is exempt from GST under Serial Number 14 of Notification No. 12/2017-Central Tax (Rate), as it meets the criteria of providing lodging services below Rs. 1000 per day. The exemption under Serial Number 12 is not applicable in this case.