Case-ISPRAVA Hospitality (P.) Ltd.2020] 117 taxmann.com 982 (AAR – MAHARASHTRA)
Facts of the Case-
Applicant was proposing to give out entire Luxurious Villas, consisting of multiple rooms, on rent to various customers in the State of Maharashtra. The question is whether, as per Notification No. 11/2017-Central Tax (Rate) dated 28 June 2017, as amended, the entire Villa will be treated as ‘per unit’ or the individual rooms inside the Villas will be treated as ‘per unit’.
The applicant will be charging rent for the entire Villa and not as per room basis. Further, at any given point of time only one customer will be entitled to take the Villa on lease.
Observations by AAR
It was observed by AAR that applicant was treating entire Villa as one unit and therefore will give the same on rent to only one customer for any particular given date. In other words, two different clients will not be able to book the same Villa for the same period i.e. if the particular Villa is booked by one client at a given date then another client will not able to book the same Villa on the same day.
Further the applicant had no intention to rent out rooms inside the Villa, individually and therefore there was no question of the individual rooms being treated as ‘per unit’ as per the above said Notification.
The ‘pattern of renting’ in relation to usage of the property provides the context’ or ‘perspective’ in determination of unit of accommodation. In a hotel, a room constitutes ‘a unit’ whereas in a hostel, a bed may constitute ‘a unit’, as tariff is also declared accordingly.
In the present case applicant, themselves have mentioned that, rent is proposed to be offered to clients on per day basis for entire villa. The two different clients will not be able to book the same villa and there will be no option of booking particular room of the villa. Interested clients need to book the entire villa. Thus, it is crystal clear that villa per say is ‘indivisible unit’ in applicant’s business parlance, and the declared tariff is only for the villa as a whole. Hence, the expression “per unit” in the present case will be the entire villa.
In the applicant’s case the entire Villa will be treated as “per unit” as specified under Entry no. 7 of the Notification No. 11/2017-CT’. (Rate) dated 28.06.2017
Comment The judgement is considering whether Entire Villa having multiple rooms inside would be treated as “per unit” or individual room inside the villa would be treated as “per unit”. The judgement holds that since the intention of the applicant is to give the entire villa as one unit, therefore entire villa would be considered as “per unit”. Further, if the intention of the applicant would have been to give per room in the villa or per bed, then per unit would have been different. The same has been held in the case of Srisai Luxurious Stay LLP,  116 taxmann.com 399 (AAR – KARNATAKA). The link to the judgement is https://gst-online.com/gstcase-116-exemption-to-sub-contractor-composite-supply-composition-scheme-separate-registration-accommodation-services/