Dispute over GST classification & exemption for services provided leads to Appellate Authority intervention

The case involved determining the applicable GST SAC code and rate for services provided to AMSL, assessing whether the supply constituted a composite or mixed supply, and examining the exemption status under Notification No. 12/2017-CT (Rate). The SGST member classified the services as business support services taxable at 18%, while the CGST member viewed them as a composite supply of hospitality services, eligible for exemption under the notification. Due to conflicting opinions, the case was referred to the Appellate Authority for a final decision under Section 98(5) of the CGST/TNGST Act, 2017.

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Issues Involved:
1. Applicable GST SAC code and GST rate for supplies made to AMSL.
2. Classification of the supply as composite or mixed.
3. Exemption status of the service under Notification No. 12/2017-CT (Rate) dated 28.06.2017.

Detailed Analysis:

1. Applicable GST SAC Code and GST Rate:
The applicant, engaged in providing hospitality services including boarding and lodging to AMSL, sought clarification on the applicable GST SAC code and rate. The services provided include accommodation, food, and other amenities to candidates under the DDU-GKY scheme. The applicant charges Rs. 9,000 per candidate per month, split into Rs. 3,500 for accommodation and Rs. 5,500 for food and other facilities.

2. Composite or Mixed Supply:
The applicant argued that their services constitute a composite supply under GST law, with accommodation as the principal supply. They referred to Section 2(30) of the CGST Act, 2017, defining composite supply as two or more taxable supplies naturally bundled and provided in conjunction with each other. The applicant contended that the primary service is accommodation, with food and other amenities being ancillary.

However, the SGST member disagreed, classifying the services as business support services under SAC Code 998599, taxable at 18%. The CGST member, on the other hand, concurred with the applicant, identifying the services as a composite supply with accommodation as the principal supply, falling under SAC 9963.

3. Exemption Under Notification No. 12/2017-CT (Rate):
The applicant claimed exemption under Sl. No. 14 of Notification No. 12/2017-CT (Rate), which exempts services by hotels, inns, guest houses, etc., for residential or lodging purposes with a value of supply below Rs. 1,000 per day. The applicant argued that their services qualify for this exemption as their per day equivalent tariff is below Rs. 1,000.

The CGST member supported this view, noting that the total consideration per candidate per day is Rs. 300, well below the Rs. 1,000 threshold, thus qualifying for the exemption. The SGST member, however, did not address this exemption, focusing instead on the classification of the service.

Separate Judgments:
- SGST Member's Ruling: The services provided by the applicant to AMSL are classified as business support services under SAC Code 998599, taxable at 18%. The SGST member did not agree with the applicant's classification of the services as a composite supply of accommodation and other amenities.

- CGST Member's Ruling: The services are a composite supply of hospitality services, with accommodation as the principal supply, falling under SAC 9963. The services qualify for exemption under Sl. No. 14 of Notification No. 12/2017-CT (Rate) as the per day equivalent tariff is below Rs. 1,000.

Conclusion:
Due to the differing opinions of the SGST and CGST members, the case was referred to the Appellate Authority for a final decision, as per Section 98(5) of the CGST/TNGST Act, 2017.

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