in which head service should be classified

[Varun Arora]

Dear Experts,

If a service provider is providing the services to hostel students like mess facility renting ot immovable property and furniture and complete package to students and charges flat amount let's say 10,000 then whilie applying for service tax registration what should be classifiable service .

Thanks in advance.

[KASTURI SETHI]

Replied against Issue ID no.109859.

[Rajagopalan Ranganathan]

Sir,

As opined by Shri. Sethi Sir, you are providing bundled service. As per the explanation appended to Section 66F of Finance Act, 1994 "bundled service" means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services.

In my view your main service is renting out of immovable property, that the hostel building /room along with you provide mess facility (catering service) and other incidental services. As per section 66F 93) (a) of Finance Act, 1994 if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character. In your case the main service provided by you is rent out of immovable property. Therefore you have to pay service tax under renting of immovable property service.

[Ganeshan Kalyani]

Nicely replied by Sri Rajagopalan Sir. My knowledge is enriched. Thanks.

[Mahir S]

Most specific description to be preferred over more general description for service capable of deferential treatment for any purpose based on its description.

[KASTURI SETHI]

Sh.Rajagopalan Ranganathan Ji,

I agree with your views and interpretation. Pl. throw more light on this issue just for knowledge sake. In this query the following services are involved:-

1. Mess facility i.e. Section 66 E (i)

2. Renting of Immovable Property Section 66 E (a)

3.Furniture or you may say well furnished room.

4.To cap these all complete package

How can we determine that service mentioned at serial no.2 above is main service or major service out of the above ? How does this single service give the colour of essential character ? Can we not supply emphasis on "Complete Package" ? Can we not term "Complete Package" as "Bundled Services" and if so, the assessee would be benefited by abatement of 30% available under Notification No.26/12-ST dated 20.6.12 as amended ?

Looking forward to your views for enrichment of my knowledge. Thanks a lot.

[Rajagopalan Ranganathan]

Sir,

In my view "complete package" means renting of immovable property(renting of room) catering (mess facility) renting of furniture and other incidental services. But Shri Varun Arora has mentioned mess facility renting ot immovable property and furniture and complete package. therefore I thought that complete package includes other services other than catering, renting of immovable property etc. Therefore I treated renting of immovable property as main service . I would like to hear your views in this matter.

[KASTURI SETHI]

Sh.Rajagopalan Ranganathan Ji,

Sir, Only the querist can clarify whether complete package includes all services or Complete package is in addition to mess facility, renting of immovable property, furniture etc.

AI Summary

Bundled service classification decides if renting of immovable property governs tax treatment of hostel package services. Classification pivots on whether the hostel provider's flat package (mess, room renting, furniture and incidentals) is a bundled service or whether one element-most often renting of immovable property-gives the bundle its essential character; if so, the entire supply is classifiable as renting of immovable property for service-tax registration and levy, otherwise the dominant service head governs.