2021 (12) TMI 720 - AAR - GST

Tax Ruling: Accommodation service exempt from GST, food service taxed at 5%. Separate invoices issued.

The ruling determined that the accommodation service (SAC 99632) provided by the applicant is exempt from GST, while the food service (SAC 99633) attracts ... Classification of services - composite supply - mixed supply - declared tariff - exemption of accommodation with declared tariff below one thousand rupees - supply of food taxable at 5% without input tax credit - SAC 9963Classification of services - SAC 9963 - Applicable GST Service Accounting Code (SAC) for the services supplied by the applicant and the applicable rate of tax. - HELD THAT: - The Authority examined the nature of supplies rendered to AMSL and concluded that the services fall under the hotel/ lodging service grouping identified by SAC 9963. The record shows separate invoicing and separate contractual allocation for accommodation and for food/other facilities. Applying the relevant notifications, the Authority held that accommodation services qualify under the declared tariff concept and food supply falls under the entry dealing with supply of food by restaurants/eating joints. Consequently, accommodation is covered by the exemption entry for declared tariff below one thousand rupees per unit per day, whereas the supply of food attracts the concessional rate specified for such supplies. [Paras 16, 17, 18, 19]SAC 9963 is applicable; accommodation (SAC 99632) is exempt (declared tariff below Rs. 1,000 per day) and supply of food (SAC 99633) attracts GST at 5%.Composite supply - mixed supply - Whether the services supplied to AMSL constitute a composite supply or a mixed supply. - HELD THAT: - The Authority applied the statutory definitions of composite supply and mixed supply. It noted that the applicant issues separate invoices and the agreement demarcates charges separately for accommodation and for food/other facilities, including different prices for each. Because the supplies are not provided to AMSL as a bundled package for a single price nor as inherently 'naturally bundled' by the applicant, they do not meet the definition of composite supply; nor do they qualify as mixed supply which requires a single price for multiple individual supplies. The factual finding of distinct invoicing and separate pricing is determinative. [Paras 13, 14, 15, 19]The transactions are neither a composite supply nor a mixed supply but two separate supplies.Declared tariff - exemption of accommodation with declared tariff below one thousand rupees - supply of food taxable at 5% without input tax credit - Whether the accommodation service is exempt under Notification No.12/2017-CT (Rate) and the GST treatment of the food supply. - HELD THAT: - Applying the definition of declared tariff and the conditions of Notification No.12/2017-CT (Rate), the Authority found that the consideration charged per candidate per month translates to a declared tariff below Rs. 1,000 per unit per day. On that basis the accommodation service meets the exemption condition in the notification and is taxable at nil rate. The Authority further examined the notification entry applicable to supply of food and concluded that the applicant's supply of food falls under the relevant entry for restaurants/eating joints as amended, attracting GST at 5% without input tax credit. [Paras 16, 17, 18, 19]Accommodation is exempt under Notification No.12/2017 (declared tariff below Rs. 1,000 per day); supply of food attracts GST at 5% (without input tax credit) as per the relevant notification.Final Conclusion: The Advance Ruling holds that the services supplied to AMSL fall under SAC 9963; they constitute two separate supplies (accommodation and food), with the accommodation service exempt under Notification No.12/2017 (declared tariff below Rs. 1,000 per day) and the food supply taxable at 5% without input tax credit. Issues Involved:1. Applicable GST SAC and GST rate for the supply of service.2. Determination of whether the service is a composite supply or a mixed supply.3. Exemption status under Notification No.12/2017-CT (Rate) dated 28-06-2017.Issue-wise Detailed Analysis:1. Applicable GST SAC and GST Rate for the Supply of Service:The applicant, engaged in providing boarding, lodging, and other services to AMSL, sought clarity on the applicable GST SAC and rate. The ruling determined that the applicable GST SAC for the described services is 9963. The accommodation service (SAC 99632) provided by the applicant to AMSL is exempted from GST as per Notification No.12/2017-CT (Rate) dated 28-06-2017, since the declared tariff of a unit of accommodation is below one thousand rupees. However, the supply of food service (SAC 99633) attracts GST at 5% as per Sl.No. 7(ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 13/2018-Central Tax (Rate) dated 26.07.2018.2. Composite Supply or Mixed Supply:The applicant questioned whether their services constituted a composite supply or a mixed supply. The ruling clarified that the services provided by the applicant do not constitute a composite supply. Composite supply, as defined under Section 2(30) of the CGST Act, 2017, involves two or more taxable supplies that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one being a principal supply. The applicant's services were not considered naturally bundled, as separate invoices were raised for accommodation and food services. Therefore, the services do not meet the criteria for composite supply.Similarly, the services provided by the applicant do not constitute a mixed supply. Mixed supply, as defined under Section 2(74) of the CGST Act, 2017, involves two or more individual supplies made in conjunction with each other for a single price, which does not constitute a composite supply. Since the applicant provides two separate services for different prices, the services do not meet the criteria for mixed supply.3. Exemption Status under Notification No.12/2017-CT (Rate) dated 28-06-2017:The applicant sought clarity on whether their service is exempted under Notification No.12/2017-CT (Rate) dated 28-06-2017. The ruling confirmed that the accommodation service provided by the applicant is exempted under this notification, as the declared tariff of a unit of accommodation is below one thousand rupees per day. However, the supply of food service is taxable at 5% GST as per the relevant notifications.Conclusion:The ruling provided a clear classification and tax treatment for the services provided by the applicant. The applicable GST SAC for the services is 9963. The services do not constitute either a composite supply or a mixed supply but are considered two separate supplies. The accommodation service is exempt from GST, while the food service attracts GST at 5%.