Hostel accommodation charges up to Rs. 1000 per seat qualify for GST exemption under Entry 14 of Notification 12/2017

AAR Rajasthan ruled that hostel accommodation charges up to Rs. 1000 per seat provided by education foundation to university students qualify for GST exemption under Entry 14 of Notification 12/2017. The authority determined this constitutes a single taxable service of residential accommodation, not composite or mixed supply. Despite "hostel" not being specifically mentioned in the exemption entry, it falls under "whatever name called" for residential/lodging services. The hostel service is optional with separate consideration, not bundled with educational services, satisfying exemption conditions.

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Issues Involved:
1. Classification of Hostel Accommodation Service.
2. Applicability of Notification No. 12/2017-CT (Rate) and Tax Liability on Hostel Accommodation Service.
3. Determination of the Value of Supply.
4. Clarification on 'Unit of Accommodation'.
5. Whether the Hostel Accommodation Service is provided independently or bundled with other services.
6. Eligibility for exemption under Entry No. 14 of Notification No. 12/2017-CT (Rate).

Detailed Analysis:

1. Classification of Hostel Accommodation Service:
The applicant, Mody Education Foundation (MEF), provides hostel accommodation services to students of Mody University of Science and Technology (MUST). The CBIC clarified in Circular No. 32/06/2018-GST that hostel accommodation services by trusts are exempt if the declared tariff is below Rs. 1000 per day, equating these services to those provided by hotels, inns, guest houses, etc., under Service Accounting Code (SAC) 9963.

2. Applicability of Notification No. 12/2017-CT (Rate) and Tax Liability on Hostel Accommodation Service:
The Notification No. 12/2017-CT (Rate) exempts services by a hotel, inn, guest house, club, or campsite for residential or lodging purposes with a declared tariff of a unit of accommodation below Rs. 1000 per day. The Rajasthan Appellate Authority for Advance Ruling (RAAAR) confirmed that a 'Hostel Seat' is considered a 'unit of accommodation,' making MEF's hostel accommodation services eligible for exemption under this notification.

3. Determination of the Value of Supply:
Section 15(1) of the GST Act defines the value of supply as the transaction value, which is the price actually paid or payable for the supply. MEF charges less than Rs. 1000 per day per hostel seat, making the service eligible for exemption.

4. Clarification on 'Unit of Accommodation':
The RAAAR ruled that in the case of MEF, a 'Hostel Seat' is the unit of accommodation, not a room or dormitory. This classification aligns with the general practice of charging per seat in hostels, inns, and dharmshalas, as opposed to per room in hotels.

5. Whether the Hostel Accommodation Service is provided independently or bundled with other services:
MEF provides hostel accommodation independently, without bundling it with other services like food and beverages. MUST handles all other services separately. Therefore, MEF's service does not constitute a composite or mixed supply under Sections 2(30) and 2(74) of the GST Act.

6. Eligibility for exemption under Entry No. 14 of Notification No. 12/2017-CT (Rate):
The service provided by MEF is classified under HSN 996322, which covers room or unit accommodation services provided by hostels. As the hostel accommodation charges are less than Rs. 1000 per day per hostel seat and are not bundled with other services, they fall under Entry No. 14 of Notification No. 12/2017-CT (Rate), making them exempt from GST.

Conclusion:
The Rajasthan Authority for Advance Ruling concluded that the hostel accommodation charges per hostel seat provided by MEF to the students of MUST, with a value of service up to Rs. 1000 per day, are eligible for exemption under Entry No. 14 of Notification No. 12/2017-CT (Rate). This ruling is based on the condition that the charges are solely for accommodation and do not include mixed supplies such as food and beverages.

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