In re Mody Education Foundation (GST AAR Rajasthan)
Whether Hostel Accommodation Charges per Hostel Seat provided by the Mody Education Foundation (MEF) to the students of Mody University of Science and Technology (MUST) having value of service upto Rs. 1000/- per day would be eligible for exemption under entry no. 14 of the Notification No. 12/2017 dated 28-06-2017?
On gone through of above exemption Entry No. 14 of the Notification No. 12/2017-CT (R) Dated 28.06.2017 as well as above discussed CBIC’s Circular No. 32/06/2018-GST dated 12th February, 2018, we find that the description of service is user based, meaning that, if the accommodation is used for residential or lodging purpose then it is immaterial who the user is. The said entry mentions “Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes”. The word ‘hostel’ not being specifically mentioned implies that the same would be covered under the term ‘Whatever name called’. The services provided by such hostel, for residential or lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of an accommodation is below one thousand rupees per day. Therefore, the scope of the entry is restricted to use of the accommodation unit for residential and lodging purpose only. In consonance with the ruling passed by Hon’ble Rajasthan Appellate Authority for Advance Ruling (RAAAR) we also find that ‘Hostel Seat’ as an ‘unit of accommodation’ in the instant case.
In the instant case, we further find that the service of hostel is optional and not coming out from the package and separate consideration will be charged for providing such hostel facility to the students. In fact, the hostel fees are not a part of any package concerning commercial training & coaching services rendered by the applicant. The Applicant is exclusively providing the Hostel Accommodation Service in isolation and no other service is clubbed or bundled along with the Hostel Accommodation Service. Thus, there is no question of Composite Supply u/s 2 (30) of the GST Act or Mixed Supply u/s 2(74) of the GST Act in the Case of the Applicant.
The Entry No. 14 of Notification No. 12/2017-Central Tax (Rate) is analysed by us thoroughly. It says all services of SAC 9963 provided by sue a supplier having a declared tariff of less than Rs. 1000-00 per day or equivalent would be exempt. As the applicant who is also registered as Charitable Trust’ as per Form No. 10AC of the Income Tax Act, 1961 will charge less than Rs. 1000/- per ‘Hostel seat’ per day from students therefore, the said service is exempted from GST with a condition that this value should be in lieu accommodation facility only and should not be for mixed supply including food & beverage etc. Therefore, considering the provisions of Entry No. 14 of the Notification No. 12/2017-CT (R) Dated 28.06.2017 and clarification given by CBIC in Circular No. 32/06/2018-GST dated 12th February 2018, it is concluded that, the applicant’s activity is satisfying the conditions of Entry No. 14 of said Notification No. 12/2017-CT (R) Dated 28.06.2017 and hence would be exempted from GST.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, RAJASTHAN
Note: Under Section 100 of the CGST/RGST Act, 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/RGST Act, 2017, within a period of 30 days from the date of service of this order.
At the outset, we would like to make it clear that the provisions of both the CGST Act and the RGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the RGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / RGST Act would be mentioned as being under the “GST Act”.
The issue raised by M/s Mody Education Foundation. NH-11, Laxmangarh, Distt. Sikar (Rajasthan) – 332311 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) (b), (c) & (e) given as under:-
(a) Classification of any Goods or Service or Both
(b) Applicability of a Notification issued under the Provisions of this Act;
(c) Determination of the time and value of supply of goods or services or both ;
(e) Determination of the Liability to pay tax on any goods or services or both.
Further, the applicant being a registered person (GSTIN is 08AABTM0215EIZ5 as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling.
A. SUBMISSION OF THE APPLICANT: (in brief)
> That Mody Education Foundation (MEF), having its registered office at Kanchanjungha (7th Floor), 18- Barakhambha Road, New Delhi- 110001 (herein after referred as applicant) is Society registered under Societies Registration Act. 1860 with Registration No. S-10560/1986 (date of Registration -27-02-1986).
> That Mody Education Foundation is registered as a Public Charitable Trust u/s 12AA of the Income Tax Act, 1961 having registration no. DLI(C)(I_1178).
> That MEF is running a CBSE affiliated School from class 3rd to 12th at NH-11. Laxmangarh. Distt. Sikar (Rajasthan) – 332311. MEF is registered under GST law having GSTIN 08AABTM02I5E1Z5. MEF is also the Sponsoring body of Mody University of Science & Technology;
> That Mody University of Science & Technology (herein after referred as MUST) is a university established u/s 2(f) of the UGC Act, 1956 and providing educational services to its Students (Girls Students Only). MUST is registered u/s 10(23)(c) of the Income Tax Act, 1961 vide registration no. AAAJM1982F/08/14-15/T-0011/10(23C)(iv)/ITAT. MUST is also registered under GST law having GSTIN-08AAAJM1982F1Z4.
> That MEF has surplus infrastructure facilities after utilization thereof for its own activities which includes Hostels Rooms;
> That the surplus infrastructure which includes Academic & Office Building, certain Hostel Buildings and Dining Hall, has been currently let out to MUST for use and GST being charged by MEF on the Rental Charges for the aforesaid infrastructure along with GST @18%;
> That University is considering a proposal to discontinue the use of Hostel Building as it is finding it difficult to maintain and operate the same. Hence, Hostel Buildings are proposed to be returned back to MEF;
> That MUST will continue to run and operate the Dining Hall and other facilities for its students, for which it will continue to pay Rent to MEF along with the Applicable GST i.e. 18% at present;
> That MEF is considering a proposal to directly allow the students of MUST, to use the ‘Hostel Accommodation’ in its surplus Hostel Rooms, which includes only Hostel Seat Accommodation but does not include (i.e. exclude) serving Meals (Food & Beverages) to the students of MUST;
> That for the aforesaid Hostel Accommodation Service: MEF will directly charge ‘Accommodation Charges’ from the students of MUST;
> That MUST will continue to collect Fees from its students for all services other than Hostel Accommodation like Education, F&B etc, on which GST is not charged being exempt under Sr. No. 66 of Notification No. 12/2017 dated 28-06-2017 as amended;
> That the ‘Hostel Accommodation Charges’ shall be based on the type of ‘Hostel Seat’ opted by the student of MUST. Following FOUR categories of Hostel Seats are being offered by MEF for the students of MUST:-
i) Hostel Seat in a Single Occupancy A.C. Room;
ii) Hostel Seat in a Single Occupancy Non A.C. Room
iii) Hostel Seat in a Double Occupancy A. C. Room;
iv) Hostel Seat in a Double Occupancy Non A. C. Room;
> That the amount to be charged by MEF from the students of MUST for Hostel Accommodation Charges shall be based on per ‘Hostel Seat’, which shall be less than Rs. 1000/- per day. The Hostel Accommodation Charges shall be collected for the entire year either as one-time payment or in Installments.
> Earlier Application for Advance Ruling & its Result:-
i) That MEF has earlier applied before the Rajasthan Authority for Advance Ruling (AAR) vide ARN No. AD0810200100823 dated 30/10/2020 to seek an Advance Ruling in respect of the following matter:-
” Whether Hostel facility’ which includes Lodging and Boarding service provided by MEF to the students of MUST having value of service upto Rs 1000/- per day would be eligible for exemption under entry no. 14 of the notification 12/2017 CTR Dt 28-06-2017? “
ii) That the AAR has passed its order vide Advance Ruling No. RAJ/AAR/2021-22/02 dated 07-07-2021 given following ruling:-
a) The Unit of Accommodation is Room; and
b) Hostel Accommodation with F&B Services is a mixed supply and liable to highest rate of GST
iii) That MEF has appealed against the ruling of the AAR vide Application No. AD0808210014487 dated 06-08-2021, against which the Hon’ble Rajasthan Appellate Authority for Advance Ruling (AAAR) has passed Order No. RAJ/AAAR/01/2021-22 dated 27-10-2021, confirming following position under Law:-
a) Hostel Seat shall be considered as a Unit of Accommodation in case of the Appellant i.e. MEF (Refer; Para 8.7 on Page 11 of the Order); and
b) Accommodation Service along with F&B shall be considered as Mixed Supply and liable to highest rate of Tax (Refer: Para 8 8 on Page 11 of the Order);
Key Features of Proposed Hostel Accommodation Service:-
Key Features of the proposed Hostel Accommodation Service to be provided by MEF to the students of MUST are as follows.-
i) Only ‘Hostel Accommodation’ will be provided by the MEF to the students of MUST, for which MEF will directly charge Hostel Accommodation Charges from the students of MUST,
ii) No other services like Education, supply of Food and Beverages (F&B) etc shall be provided by MEF to the students of MUST;
iii) MUST will continue to provide and collect Fees from its students or all services other than Hostel Accommodation like Education, F& etc, for which it will charge its students accordingly and MEF will not be involved in the same;
APPLICANTS INTERPRETATION OF LAW
The submission on the Legal Provisions related to Hostel Accommodation Service without being clubbed with any other service like serving of Food and Beverages are as below:-
1. Classification of Hostel Accommodation Service
In respect of the classification of the Hostel Accommodation Service provided by Trusts to students covered within the definition of charitable activities, CBIC has clarified at S. No. 1 of Circular No. 32/06/2018-GST dated 12-2-2018 and reproduced below for ready reference:-
TABLE 1
