in which head service should be classified

[varun arora]

Dear Experts,

If a service provider is providing the facility to Hostel students like mess facililty, renting to immovable property and furniture facility then in which head this service should be classifiable i mean two or more service should we registered ourselves.

Thanks in advance..!!

[KASTURI SETHI]

Sh.Varun Arora Ji,

Answer to your question is Bundled Services.

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir. The answer to this query is in issue Id 109858 by Sri Rajagopalan Sir. Thanks.

[Vijay kumar]

Please refer to Section 66F of the Finance Act, 1994 which reads as follows:

"66F (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description.

(3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:--

(a) 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, you are providing the Hostel accommodation along with mess facility and furniture facility. It's a case of naturally bundled services. The service which gives it the essential character is the hostel accommodation service, other services being incidental in nature (mess and furniture facility could be optional too). You may classify your service accordingly.

[KASTURI SETHI]

Sh.Vijay Kumar Ji,

Kindly go through my views in Issue ID 109858. I am of the view that the words, "Complete Package" includes all the services provided by the querist but I am not sure about it. Only querist knows about this aspect. In case "Complete Package" includes all services, then it should be one Bundled Services" and the assessee would be eligible for abatement. I also want to know your views. Thanks a lot.

AI Summary

Bundled services: treat combined hostel, mess and furniture as a single service based on essential character, impacting registration. Treat provision of hostel accommodation together with mess and furniture as a bundled service. Under the rule favouring the most specific description and the bundled-service test, naturally bundled elements are a single service determined by the element giving the package its essential character. If accommodation imparts that character, classify the composite under hostel accommodation; incidental mess and furniture need not be separately registered and abatement eligibility follows the principal service.