Hostel Service with a Tariff of a unit of Accommodation below Rs. 1000/ day is exempt from GST: AAR
The Chattisgarh Authority of Advance Rulings in an application filed by M/s Shri. Kamal Kishor Agrawal for Ramnath Bhimsen Charitable Trust held that a provision of hostel service where the tariff of a unit of accommodation is below Rs. 1000/day is exempt from GST.
The issue before the Authority is two-fold. The first one being, the determination of whether the supply of hostel accommodation on rent to various borders is exempted under the notification. The second issue is regarding the determination of the tax if the Authority rules that tax is applicable.
The applicant, a charitable trust is running a hostel providing basic facilities which are required to stay and to study which include well-furnished residence, round the clock security, homely ambience, etc.
It was the contention of the applicant that the service provided by them is exempt from GST since the same falls within the Entry No. 12 of Notification 12/2017 which exempts services provided by way of renting of residential dwelling for use as residence to the occupants. By the bench constituting of Hon’ble members Smt. Kalpana Tiwari and Mr Rajesh Kumar Singh, it was held that the girls residing in both the hostels are provided with various facilities like food supply from canteen, parking space, coaching, library, etc. which are all taxable supplies. Further, all the facilities are only for the occupants of the hostels.
The occupant girls are neither allowed to have food from outside nor are outsiders allowed to have food from the hostel. Signifying, accommodation facility is the only principal supply and all other facilities are inter-related as they are provided without any extra charge. Another Circular dated 12.02.2018 has been pointed out which signifies that the hostel facility does not fall within the ambit of ‘charitable activity’.
However, it has been provided by Noti. No. 12/2017 that having declared a tariff of a unit of accommodation below Rs. 1000 per day is exempt. Since the applicant is collecting hostel charges of Rs. 7000/ month per bed single room and the same being less than Rs. 1000 per day shall stand exempted i.e. subject to Nil rated duty.