Running of School Hostel - Whether Taxable Service ?

[Ramachandran and Ramachandran Associates Subramanian]

1. My client is a registered Charitable Trust and is running an academic institution - a  residential Public School with classes from 1st to 12th standard in own premises.
2. The Trust has rented out a building  to a person for the purpose of providing Hostel facility to the students.  The building is located inside the school campus.  It is the responsibility of that person to maintain the hostel and also provide food for the students.
3.  `Renting of Immovable Property Service’ is a taxable service with effect from 22.05.2007.  However,  the definition of “Immovable Property” for the purpose of Section 65(105)(zzzz) does not include building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. So, it appears that no service tax is chargeable under the Renting of Immovable Property Service. Is this view correct ?
4. The Hostel facility is meant only for the students pursuing their school education in this school.  No outsider is permitted.   The inmates of the Hostel are all students studying from 1^st to 12^th standard.
5. School Hostel is not in the nature of Short Term Accomodation Service since the resident students live in the hostel till the completion of their academic term ranging from 1 to 12 years in accordance with the time of admission. School Hostel is a  residential dwelling and we are advised that Hostel is not in the nature of the defined service and hence the same is not liable for service tax. And so no service tax.is being collected from the students. Whether this category of Service is taxable  ?
6. Persons providing catering services within the premises of academic institutions were made liable for service tax w.e.f 01.03.2006.  Since the person running the School Hostel is also providing food to the inmates i.e students, whether this will be construed as OUTDOOR CATERER'S SERVICE ?

Are there any case laws on the subject ?

 

Ramachandran Subramanian

 

AI Summary

Charitable trust's hostel and food services: Tax exemption on residential rent; food taxable if outsourced. A charitable trust running a residential school rented a building for a student hostel within the campus. The trust queries whether renting this building is taxable under 'Renting of Immovable Property Service,' noting that such properties used solely for residential purposes are exempt. Additionally, they question if providing food in the hostel constitutes 'Outdoor Caterer's Service.' Responses indicate that hostel services are non-taxable as they are not temporary accommodations. If the school itself provides food, it is not taxable, but if outsourced, it may be considered taxable catering service, subject to exemptions and abatements.