Accommodation and Food Services to Vocational Students Ruled as Separate Supplies Under GST, Not Eligible for Composite Treatment

The AAR determined that accommodation and food services provided to vocational training students were distinct supplies, not a composite supply. The accommodation service (SAC 99631) was exempt if daily rent was below Rs. 1000. Food service (SAC 99633) attracted 6% CGST/SGST with ITC until 14.11.2017, and 2.5% CGST/SGST without ITC thereafter. The Authority rejected the applicant's claim that these services were naturally bundled, noting that food charges varied by headcount while accommodation costs remained fixed. Consequently, the services did not qualify for exemption under Notification No. 12/2017.

---

---

Issues involved:
1. Determination of applicable GST SAC and GST rate for the service provided.
2. Classification of the supply as a composite supply or a mixed supply.
3. Assessment of whether the service is exempted under Notification No. 12/2017.

Analysis:

Issue 1: Determination of applicable GST SAC and GST rate:
The applicant sought clarification on the applicable GST SAC and GST rate for the service provided. The Authority examined the nature of the service, which involved providing boarding and lodging to students undergoing training under a vocational program. The applicant charged Rs. 9000 per candidate per month, with a portion allocated to rent for accommodation and another portion for food. The Authority referenced Notification No. 12/2017 and identified the SAC for accommodation as '99631,' which was exempt if the daily rent was below Rs. 1000. For the supply of food, the SAC was '99633,' with tax rates varying based on the period. Initially, the rate was 6% CGST and SGST with ITC up to 14.11.2017, and later reduced to 2.5% CGST and SGST without ITC from 15.11.2017 onwards.

Issue 2: Classification of the supply as composite or mixed:
The Authority analyzed whether the service provided constituted a composite supply or a mixed supply. The applicant argued that the service was a composite supply as the accommodation and food were bundled together, with accommodation being the principal supply. However, the Authority found that the pricing structure indicated variable pricing for food based on the headcount, making it distinct from the accommodation cost. Citing the definition of composite supply in Section 2(30) of the CGST Act, the Authority concluded that the two supplies were not naturally bundled and integral to each other, thus classifying them as distinct supplies.

Issue 3: Exemption under Notification No. 12/2017:
The applicant inquired whether the service provided was exempted under Notification No. 12/2017. The Authority determined that the service did not qualify for exemption under the mentioned notification due to the distinct nature of the supplies provided, i.e., accommodation and food. The ruling clarified that the service did not meet the criteria for exemption as outlined in the notification.

In conclusion, the Authority provided detailed analysis and rulings on each issue raised by the applicant regarding the GST SAC, GST rate, classification of the supply, and eligibility for exemption under Notification No. 12/2017. The decision was based on a thorough examination of the facts presented and relevant provisions of the GST Act.

---