Case: – Ramnath Bhimsen Charitable Trust  105 taxmann.com 153 (AAR – CHHATTISGARH)
Applicant is registered under Public Trust Act, 1951 w.e.f. 27-06-1991. They are running girls hostels in the name of Shree Ramesh Sewa Sadan and Godavari Sewa Sadan (hereinafter referred to as ‘hostel’). Hostel is providing basic facilities which are required for stay and to purse studies which include well-furnished residence, round the clock security, homely ambience, nutritious food, ample parking space etc. and in consideration, hostel is charging a nominal lump sum fee of Rs. 6000/- per month per person. In other words hostel is charging a single amount for providing above-mentioned services.
The applicant is running two girls hostels. They are providing 205 bed facility at Shree Ramesh Sewa Sadan which include 12 single bedrooms and 550 beds facility including 37 single bed rooms at Godavari Sewa Sadan. All the rooms are air-conditioned. For the above accommodations, monthly charges of Rs. 6000/- per month are paid by the occupants. The following facilities are jointly and exclusively being provided to the occupants of hostel:-
Canteen: – The hostel has well maintained canteen which provides healthy diet and hygienic food.
Parking Facility: – Students are provided parking facility in the hostel campus which is very safe & spacious.
Hot Water Facility:-The hostel has solar geyser which ensures hot water facility to the students.
Guest Rooms: – There is provision to accommodate the parents of occupants in the three guest rooms.
Temple: – Hostel also comprises of a temple at the ground floor.
Above mentioned facility and accommodation is provided in consideration of Rs. 24000/- charged quarterly from boarders.
Query 1: Whether the activity of providing the hostel on rent to various boarders is exempted? If it is exempted in such case, under which exemption notification the same is exempted?
Query 2: Whether the activity of providing the hostel on rent to various boarders is taxable? If it is taxable, in such case, under which service access code the same is taxable?
3. Observation by AAR
Observation by AAR about supply by the applicant being a composite supply-AAR observed from thedocuments/brochure/submitted by applicant that it is evident that girls residing in both hostels are provided with various facilities like food supply from canteen, parking space, coaching, library, entertainment which are all taxable supplies. Apart from above they are also provided with provision of guest rooms for visiting parents of occupants. All facilities are only for occupants of hostels. The girls residing there are neither allowed to have food from outside nor are outsiders allowed to have food from hostel canteen. Thus accommodation facility at hostel is the only principal supply and all other facilities are interrelated as they are provided exclusively to the occupants of hostel only, without any extra charge. It has categorically been stated by the applicant that no other charges other than above amount is collected from the occupants on account of other allied facilities being provided. On above lines, the amount/charges received from the occupant girls at Shree Ramesh Sewa Sadan (205 beds comprising 12 single rooms) and Godawari Sewa Sadan (550 beds comprising 37 single rooms) against the facility of accommodation is during the course of business.
Reference to Circular No. 32/06/2018-GST, dated 12-02-2018- It was observed by AAR that primarily occupants approach Hostel facility providers for having accommodation facility and only once this accommodation facility gets ensured, does the need for other allied facilities arise. Here in the instant case no other charges are being collected from the occupants for the allied services being provided. Further it is clear from Circular No. 32/06/2018 dated 12-02-2018 that amount received for providing taxable supplies in hostel under Notification No. 12/2017(Rate) illustrating lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. The lump sum amount received per unit (bed) per day against the accommodation services in hostel is to be treated as exempt supply.
Observation about the Taxability of the Activity or Transaction of the Applicant- Applicant is collecting Rs. 28000/- and Rs. 24000/- respectively from occupants of Hostel, quarterly in lump sum. This amount is less than Rs. 1000/- per unit (bed) when computed on a daily basis. Such supply under GST gets categorized under Notification No. 12/2017, dated 28-06-2017 (Rate) (Serial No. 14) tariff heading 9963 services by a hotel, inn, guest house, club or campsite by whatever name called, for residential or lodging purposes having declared tariff of a unit accommodation below one thousand rupees per day or equivalent and accordingly merits treatment as nil rated liability.
The activity of providing accommodation services by the applicant in their hostel for which the applicant is collecting an amount below the threshold limit of Rs. 1000/- per day and no other charges are being collected for providing other allied facilities/services therein viz. canteen food, parking space for vehicles, coaching, library, entertainment etc. merits exemption as stipulated under Notification No. 12/2017-State Tax (Rate) No. F-10-43/2017/CT/V(80), Dated 28.06.2017 under Serial No. 14, Chapter 9963. This amount received for such supply by the applicant falling under tariff heading 9963 qualifies being treated as nil rate tax exempted supply.
The judgement has relied upon the Circular for holding that facilities provided by applicant was in the nature of accommodation services and therefore eligible for exemption. However, there is a very thin line wherein the composite supply of hostel accommodation becomes mixed supply liable to tax at the highest rate. Therefore, the transaction has to be analyzed in detail before arriving at the conclusion.