2023 (7) TMI 704 - AAR - GST

Hostel accommodation under Rs. 1,000 per day exempt from GST until July 2022, taxable at 12% thereafter

In Re: M/s. V.S. Institute & Hostel Private Limited,

AAR UP ruled that hostel accommodation services charging less than Rs. 1,000 per day qualified for GST exemption under Notification No. 12/2017-CT(Rate) ... Exemption from GST - hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 7,000/- per day during the period from 01.08.2021 to 12.07.2022 - hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1, 000/- per day during the period from 13.07.2022 till today and also similar transaction to be undertaken in future - S.No. 12 and / or 14 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017. HELD THAT:- From the reading of Sl.No. 12 and 14 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, it is clear that the word Hostel is not mentioned anywhere. If the Government had intended to exclude Hostel services, then it would have been mentioned in the list as the word Hostel is neither a new word or uncommon word. Also, the Room or unit accommodation services provided by Hostels is clearly mentioned under HSN code 996322. From the documents provided by the applicant, it is clear that from 01-07-2017 to 15-07-2018 applicant provided commercial rental services & discharged all GST liabilities. From 16-07-2018 applicant entered into an agreement with Sharda University for letting out property and till 15-07-2021 discharged all liabilities. From 01-08-2021 applicant started providing hostel services to the students of Sharda University and some other institutions. This means from 01-08-2021 applicant is not letting out property and hence will not fall under “any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce either wholly or partially.” From the submitted record, it is clear that the applicant directly provides hostel services to students and receipt is generated in the name of V S Institute & Hostel Private Limited. On going through the exemption Entry No. 14 of Notification No. 12/2017-CT (R) dated 28.06.2017 as well as CBIC's Circular No. 32/06/2018-GST dated 12th February 2018, it is found that the description of service is user based, meaning that, if the accommodation is used for residential or lodging purpose than it is immaterial who the user is. The said entry mentions “Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes”. The word 'hostel' not being specifically mentioned implies that the same would be covered under the term 'whatever name called'. The services provided by such hostel, for residential or lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of accommodation below one thousand rupees per day till 17.07.2022. Principal Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 was amended by Notification No. 04/2022 Central Tax (Rate) dated 13.07.2022 w.e.f. 18.07.2022 in which entry No. 14 has been omitted. Similarly through Notification No. 03/2022 Central Tax (Rate) dated 13.07.2022 w.e.f. 18.07.2022 Principal Notification No. 11/2017 Central Tax (Rate) entry at serial no. 7, the word 'above One Thousand Rupees but' has been omitted. Hence from 18 07 2022 onward services provided by applicant will be covered by the relevant entry of Notification No. 11/2017 Central Tax ( Rate ) as amended and will be taxable @ 12% if unit accommodation per day is less than Rs 1000/-. Thus, hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022 is exempted from GST liability under the Sl.No. 12 and / or 14 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 - the hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and also similar transaction to be undertaken in future is not exempted from GST liability under the Sl.No. 12 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 as amended vide Notification No. 04/2022-CT (Rate) dated 13.07.2022. Issues Involved:1. Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022.2. Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and similar transactions in the future.Summary:Issue 1: Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022.The applicant, M/s V S Institute & Hostel Private Limited, provides hostel services to students of educational institutions, including food, electricity, Wi-Fi, and water, with the annual hostel rent below Rs. 1,000/- per day. The applicant sought clarification on whether such services are exempt from GST under Sl.No. 12 and/or 14 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017. The relevant portions of the Notification No. 12/2017-CT(Rate) and CBIC's Circular No. 32/06/2018-GST dated 12.02.2018 were examined, which clarified that services by a hotel, inn, guest house, club, or campsite for residential or lodging purposes with declared tariff below Rs. 1,000/- per day are exempt from GST. The Authority ruled affirmatively, confirming that the hostel accommodation provided by the applicant during this period is exempt from GST liability.Issue 2: Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and similar transactions in the future.The applicant also sought clarification on the exemption status for hostel accommodation provided from 13.07.2022 onwards. The Notification No. 04/2022-CT (Rate) dated 13.07.2022 amended the principal Notification No. 12/2017-CT(Rate), omitting Entry No. 14 and modifying Entry No. 12 to exclude residential dwellings rented to registered persons. The Authority found that from 18.07.2022 onwards, the services provided by the applicant would be taxable under the relevant entry of Notification No. 11/2017-Central Tax (Rate) as amended, with a tax rate of 12% if the unit accommodation per day is less than Rs. 1,000/-. Therefore, the Authority ruled negatively, stating that hostel accommodation provided by the applicant from 13.07.2022 onwards is not exempt from GST liability.Ruling:1. Question 1: Whether hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022 is exempted from GST liability under Sl.No. 12 and/or 14 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017Rs. - Answer: Replied in Affirmative.2. Question 2: Whether hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and also similar transactions to be undertaken in the future is exempted from GST liability under Sl.No. 12 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 as amended vide Notification No. 04/2022-CT (Rate) dated 13.07.2022Rs. - Answer: Replied in Negative.This ruling is valid only within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017 until and unless declared void under Section 104(1) of the Act.