AAR refuses GST exemption ruling for hostel accommodation services under Notification 12/2017 due to missing documentation

The AAR Rajasthan declined to issue a ruling on GST exemption for hostel accommodation services. The applicant sought exemption under Notification No.12/2017-Central Tax (Rate) for hostel facilities charging less than Rs.1000 per student per day. The AAR held that essential documentary evidence was missing, including rent/lease agreements, local authority licenses, facility brochures, fee breakups, and occupancy details. Without these documents, the AAR could not determine whether the services constituted composite or mixed supply, classify them under HSN codes, or assess exemption eligibility. The ruling was refused due to insufficient supporting documentation.

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Issues Involved:

1. Applicability of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 for hostel services.
2. Determination of tax liability on hostel services provided by the applicant.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 for hostel services:

The applicant, M/s Gurkripa Career Education Private Limited, sought an advance ruling on whether the hostel facility provided to students is exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The applicant argued that the hostel facility, which includes well-maintained residence, light, water, and food, is provided for a nominal fee of Rs. 1,02,000/- per year per student, i.e., Rs. 279/- per day, which is below the threshold of Rs. 1000/- per day specified in the notification.

The applicant contended that the hostel services should be treated as a composite supply under Section 2(30) of the CGST Act, with accommodation being the principal supply. The applicant also referred to various definitions and judicial pronouncements to support their claim that hostel services fall under the term "by whatever name called" as mentioned in the notification, thereby qualifying for the exemption.

2. Determination of tax liability on hostel services provided by the applicant:

The applicant's interpretation was that the hostel services provided are exempt from GST under Sr. No. 14 of Notification No. 12/2017-Central Tax (Rate), which exempts services by a hotel, inn, guest house, club, or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day.

The Advance Ruling Authority examined the submissions and found that the applicant did not provide sufficient documentary evidence to support their claim. The applicant failed to submit a rent agreement, license from the local authority, brochure of hostel facilities, and a break-up of fees charged. Without these documents, the Authority could not determine whether the services provided were composite or mixed supplies and whether they qualified for the exemption.

The Authority referred to CBIC Circular No. 32/06/2018-GST dated 12th February 2018, which clarifies that hostel accommodation services, including those provided by trusts, are exempt if the declared tariff is below one thousand rupees per day. However, due to the lack of supporting documents, the Authority refrained from pronouncing a ruling on the exemption applicability.

Conclusion:

The Advance Ruling Authority concluded that without the necessary documentary evidence, it could not determine the nature of the services provided by the applicant and their eligibility for the exemption under Notification No. 12/2017-Central Tax (Rate). Therefore, no ruling was extended on the clarifications sought by the applicant.

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