2023 (9) TMI 1587 - AAR - GST

Hostel accommodation services for students and working women taxable at 18% GST, not exempt as residential dwelling

IN RE : Tvl. Soggo

IN RE : Tvl. Soggo - TMI Issues Involved:1. Eligibility of hostel accommodation for GST exemption under specific notifications.2. Requirement for the applicant to register under GST.3. Applicable GST rate and tariff heading for hostel accommodation services.4. Taxability of in-house food supply as a composite supply.5. Scope of advance ruling under Section 97(2) of the GST Act.Issue-Wise Detailed Analysis:1. Eligibility of Hostel Accommodation for GST Exemption:The primary issue was whether the hostel accommodation provided by the applicant qualifies for GST exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 and similar notifications under the TNGST Act, 2017. The judgment clarified that the term 'residential dwelling' has not been defined under the CGST Act or the notification, but in normal trade parlance, it refers to a place used as a home, excluding temporary accommodations like hotels or hostels. The applicant's hostel, being a commercial establishment providing temporary accommodation with ancillary services, does not qualify as a 'residential dwelling for use as residence.' Therefore, the services provided by the applicant do not fall under the exemption and are taxable.2. Requirement for GST Registration:Since the hostel accommodation services provided by the applicant do not qualify for exemption, the applicant is required to register under GST if their aggregate turnover exceeds twenty lakh rupees in a financial year, as per Section 22 of the GST Acts. The arrangement between the applicant and the hostel occupants is considered a transaction in the course of furtherance of business, constituting 'supply' under Section 7(1)(a) of the CGST Act, 2017.3. Applicable GST Rate and Tariff Heading:The applicable GST rate and tariff heading for the hostel accommodation services were determined under Notification No. 11/2017, Central Tax (Rate), dated 28.06.2017, as amended. The services fall under Tariff heading 9963 (Accommodation, food and beverage services) and are taxable at 9% CGST + 9% SGST under Sl. No. 7(vi) of the notification. Hostel services, which are for longer stays with basic facilities, cannot be equated to hotel accommodations, which are for temporary stays with extensive facilities.4. Taxability of In-House Food Supply as a Composite Supply:The supply of in-house food to the hostel inmates was considered part of a composite supply, where the principal supply is the hostel accommodation services. As per Section 8 of the CGST Act, 2017, the tax rate on the principal supply applies to the composite supply. Therefore, the entire composite supply, including food services, is taxable at the rate applicable to the hostel accommodation services, which is 18%.5. Scope of Advance Ruling under Section 97(2):The fifth question raised by the applicant was not addressed with a ruling, as it did not fall under the scope of Section 97(2) of the GST Act. The application was admissible only for questions falling within the specified scope of Section 97(2)(a), (b), and (f) of the CGST/TNGST Act, 2017.Ruling Summary:- The hostel accommodation services are not eligible for GST exemption under the specified notifications.- The applicant must register for GST if their turnover exceeds the threshold.- The services are taxable at 18% under the specified tariff heading.- The supply of in-house food is part of a composite supply and taxed at the rate applicable to the principal supply.- No ruling was issued for the fifth question as it was outside the scope of the advance ruling provisions.