Ruling: Accommodation with tariff = Rs.7,500/day classed as SAC 9963 under serial 7(i)/(vi); renting as SAC 9972 serial 15(7)

AAR held that accommodation services provided to a government entity with room tariff under Rs.7,500 per day qualify as "hotel accommodation" (SAC 9963) and fall under serial no. 7(i)/(vi) of the rate notification, while separate renting services are classifiable as SAC 9972 under serial no. 15(7). The authority clarified that GST classification of hotel accommodation is distinct from Income Tax Act concepts and is governed solely by GST law and the corresponding Central/State rate notifications.

---

---

ISSUES PRESENTED AND CONSIDERED

1. Whether accommodation services provided under a continuous supply agreement, where the room tariff per unit per day does not exceed Rs. 7,500, are taxable under GST at the rate applicable to hotel accommodation services corresponding to value of supply (i.e., 12% - 6% CGST + 6% SGST) or otherwise.

2. Whether the supply under the said agreement constitutes "hotel accommodation" service (SAC 9963) or "renting of immovable property" (SAC 9972), having regard to the absence of demarcation/exclusive possession of specific rooms and the operational features of the contract.

3. Whether the place of supply and consequent levy is CGST/SGST (intra-state) or IGST, having regard to Section 12 of the IGST Act and the nature of lodging accommodation services.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Applicable GST rate where room tariff per unit per day = Rs. 7,500

Legal framework: Notification No. 11/2017-Central Tax (Rate) (as amended) prescribes differentiated GST rates for hotel accommodation services based on the value of supply per unit per day; post-amendment (effective 01.04.2025) value of supply follows Section 15 of the GST Act (transaction value) and the concept of declared tariff is removed. Relevant entries tax hotel accommodation at lower rate (serial no. 7(i): 6% CGST + 6% SGST) where value per unit per day = Rs. 7,500, and higher rate (serial no. 7(vi): 9% CGST + 9% SGST) where value > Rs. 7,500.

Precedent treatment: No prior authority decision was cited or relied upon in the ruling; the Authority applies the amended Notification and statutory provisions directly.

Interpretation and reasoning: The value of supply for hotel accommodation is the room tariff actually charged (transaction value under Section 15). The amendment abolishing declared tariff requires assessment of taxability on actual charges charged for the unit of accommodation. The contract establishes a net room rate inclusive of taxes (stated as Rs. 5,773 including GST @12%), and the representative confirmed plan-specific pricing (EP/CP/AP) with room rate being the basis for value. Given the highest room rent under the agreement does not exceed Rs. 7,500 per unit per day, the supply falls within the lower bracket of the Notification.

Ratio vs. Obiter: Ratio - where the transaction value per unit per day does not exceed Rs. 7,500, hotel accommodation services are taxable under the lower rate entry of the Notification (6% CGST + 6% SGST); application of Section 15 to determine value is central. Obiter - illustrative discussion on AP/CP and non-deduction for unconsumed meals is explanatory of industry practice.

Conclusion: Accommodation services supplied under the agreement, with room tariff per unit per day not exceeding Rs. 7,500, are taxable at 12% (6% CGST + 6% SGST) as hotel accommodation service (SAC 9963 / Notification serial no. 7(i)).

Issue 2: Characterisation - Hotel accommodation (SAC 9963) v. Renting of immovable property (SAC 9972)

Legal framework: Notification No. 11/2017 provides definition/explanation of "hotel accommodation"; Notification No. 12/2017 and the CGST Act define "renting of immovable property." Renting implies allowing use/occupation, often with exclusive possession and identified premises; hotel accommodation denotes supply by way of accommodation in hotels, inns, guest houses, clubs, campsites or similar commercial lodging places.

Precedent treatment: The Authority did not cite external case law; it relied on statutory definitions and the functional nature of the supply.

Interpretation and reasoning: Key factual matrix - no specific rooms were demarcated or assigned exclusively to the counterparty; rooms are provided on availability basis; supplier retains operational control; pricing is per unit per day and plan-specific (EP/CP/AP) consistent with transient lodging services. Renting typically requires demarcation/exclusive possession and longer-term occupancy; those hallmarks are absent. The contractual features (no exclusive possession, transient supply, service orientation, bundled meals in AP/CP being part of room tariff) align the transaction with hotel accommodation. The Authority also notes that GST classification for hotel accommodation and renting are distinct entries with differing SAC codes and tax entries; therefore, Income Tax Act treatment (TDS under section 194I) does not determine GST characterisation.

Ratio vs. Obiter: Ratio - where contractual and operational features show transient, non-exclusive, availability-based provision of rooms by a registered hotelier, the service is characterized as hotel accommodation (SAC 9963) and not renting of immovable property (SAC 9972). Obiter - discussion on demarcation as a general concept and the separate treatment under the Income Tax Act (TDS) is explanatory and not determinative of GST characterisation.

Conclusion: The agreemented supply is hotel accommodation service (SAC 9963) and not renting of immovable property (SAC 9972); GST classification follows the hotel accommodation entry.

Issue 3: Place of supply - CGST/SGST v. IGST

Legal framework: Section 12 of the IGST Act prescribes place of supply rules where supplier and recipient are located in India; clause (3)(b) specifies that services by way of lodging accommodation have place of supply at the location of the immovable property.

Precedent treatment: No external authorities were invoked; statutory text was applied.

Interpretation and reasoning: Both supplier and recipient are located in India; lodging accommodation is specifically listed under Section 12(3)(b); the immovable property is located in West Bengal. Therefore, supply is intra-state and attracts CGST and SGST rather than IGST.

Ratio vs. Obiter: Ratio - lodging accommodation services where supplier and recipient are in India have place of supply at the location of the immovable property and are subject to CGST and SGST. Obiter - none significant beyond statutory application.

Conclusion: The supply is intra-state (place of supply = location of immovable property in West Bengal) and liable to CGST and SGST at the applicable rate.

Additional observations on bundled meal plans (AP/CP) and valuation

Legal framework: Section 15 (value of supply) and Notification No. 11/2017 (as amended) govern valuation and rate determination; industry practice on AP/CP treats meals as part of room tariff when offered as packaged plans.

Interpretation and reasoning: Where room tariffs are plan-specific and meals are included in packaged plans (AP/CP), the entire amount charged (even if shown separately in bill) is regarded as hotel accommodation service for GST purposes and taxed under the relevant hotel accommodation entry based on the value per unit per day.

Ratio vs. Obiter: Ratio - bundled charges for meals included in room plans are subsumed within the hotel accommodation supply for rate determination under the Notification. Obiter - practical notes on hotels not refunding for unconsumed meals explain pricing rationale.

Conclusion: Charges under AP/CP/EP plans will be aggregated as the value of the hotel accommodation supply and taxed according to the value-based slab in the Notification.

Final Ruling Summary (cross-referenced)

On Issues 1-3 (cross-referencing the valuation, characterisation and place of supply analyses above): the supply in question is hotel accommodation service (SAC 9963), the value of supply per unit per day does not exceed Rs. 7,500 as per the agreement and thus attracts tax at 12% (6% CGST + 6% SGST), and the place of supply is the location of the immovable property (West Bengal), resulting in intra-state levy (CGST + SGST). The question as to alternate HSN code/rate does not arise in view of these conclusions.

---