Composite hospitality supply with accommodation as the principal element qualifies for GST exemption when the tariff threshold is met.

A bundled hospitality arrangement providing accommodation, food and allied amenities was treated as a naturally bundled composite supply rather than a residual business support service, because accommodation was the principal supply. The accommodation element was supplied for residential or lodging purposes, and the applicable per-day equivalent consideration was below the tariff threshold in Notification No. 12/2017-C.T. (Rate). The supply therefore qualified for exemption under Serial No. 14 of the notification.

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Issues: (i) Whether the hospitality arrangement for boarding, lodging and allied services constituted a business support service or a composite supply with accommodation as the principal supply. (ii) Whether the supply was eligible for exemption under Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.

Issue (i): Whether the hospitality arrangement for boarding, lodging and allied services constituted a business support service or a composite supply with accommodation as the principal supply.

Analysis: The agreement showed that the applicant was engaged as an independent contractor to provide a bouquet of hospitality services comprising accommodation, food and other amenities. The services were separately arranged and supplied in conjunction, with the accommodation element forming the core of the arrangement. On that basis, the supply did not fall within the residual category of business support services, but was a naturally bundled composite supply.

Conclusion: The supply was a composite supply, with provision of accommodation as the principal supply.

Issue (ii): Whether the supply was eligible for exemption under Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.

Analysis: Entry 14 of Heading 9963 grants nil rate for services by a hotel, inn, guest house, club or campsite for residential or lodging purposes where the declared tariff of a unit of accommodation is below one thousand rupees per day or equivalent. The accommodation supplied under the arrangement was for residential or lodging purposes, and the per day equivalent consideration was below the threshold prescribed by the notification.

Conclusion: The supply qualified for exemption under Serial No. 14 of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.

Final Conclusion: The advance ruling was answered in the applicant's favour by holding that the service was a composite hospitality supply with accommodation as the principal supply and that the applicable exemption was available.

Ratio Decidendi: A bundled hospitality arrangement in which accommodation is the principal element is a composite supply under GST, and where the tariff threshold in the exemption entry is satisfied, the supply is entitled to the prescribed exemption.

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