In re Ghodawat Eduserve LLP (GST AAR Maharashtra)
M/s. Ghodawat Eduserve LLP (Applicant) has sought clarification on the issue as to whether there lies any exemption on the service of providing hostel on rent to students under S no. 12 or S no. 14 of the Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017 (Services Exemption Notification) under GST.
The Hon’ble Maharashtra Authority of Advance Ruling (“MAAR”) noted that the Applicant is providing facility of hostel by charging students Rs. 34,000/- per annum i.e. Rs. 95/- per day per room in addition to coaching fees. The contention put forth by the Applicant of covering the service under “residential dwelling” under S no 12 of the Service Exemption Notification is not satisfied as there lies no restriction of preparing own food, stay of family members and the food is not provided by the owners in residential dwellings. Such is not the case in the current hostel service provided by the Applicant.
Further noted, considering the clarification given in Circular No. 32/06/2018-GST dated February 12, 2018, the hostel facility provided to students can be included in the provisions of S no. 14 of the Services Exemption Notification which mentions Services by hotel, inn, etc., by whatever name called for residential or lodging purposes, thereby making the same exempt from taxes.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
The present application is filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively ] by M/s. GHODAWAT EDUSERVE LLP, the applicant, seeking an advance ruling in respect of the following questions.-
1. Whether the activity of providing the hostel on the rent to various students by applicant is exempt (where hostel fees charged per student per day is much less than Rs. 1000/-)?
2.If is it exempt it shall be claimed as exempted under Serial Number 12 or Serial Number 14 of Notification No. 12/2017- Central Tax (Rate) (as amended time to time) dated 28/06/2017 ?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions made by the applicant are as under :-
2.1 M/s. Ghodawat Eduserve LLP, the applicant situated at Gat No. 584, Kolhapur Sangli Highway, Atigre, Kolhapur is registered under the CGST Act, 2017 having GSTIN 27AANFG4895L1ZJ and provides commercial training and coaching service for students appearing for 11th and 12 th standards who are desirous of appearing for I IT, etc., secifically in science stream.
2.2 Applicant is also providing hostel facility to the students on demand basis and charging them additionally. The service of hostel is optional and not coming in the form of package. The hostel provides basic residential facilities, required to stay and study which include well-maintained furnished residence, Light, water, etc. and in consideration, hostel is charges a nominal lump-sum fee of Rs. 34,000/- per year per student i.e. Rs. 95/- (Approx.) per day. The hostel is also available for the students learning in the schools nearby.
2.3. Under GST exemptions for services are notified vide Notification No. 12/2017- Central Tax (Rate), as amended time to time. In the said notification in Serial Number 12 exemption is provided for “Services by way of renting of residential dwelling for use as residence”.
2.4 However ‘Residential Dwelling’ is not defined in the Act and in exemption notification as well. Therefore, the meaning of expression ‘residential dwelling’ has to be understood in terms of the normal trade parlance. It means any residential accommodation, but does not include hotel, motel, inn, guest house, campsite, lodge, house boat, or like places meant for temporary stay.
2.5 In a Foreign Judgment, namely, in Collins (AP) V. Uratemp Ventures Limited [2012] 24 taxmann.com 134 (ECJ). it was held that –
‘Dwelling’ means a place where one lives, regarding and treating it as home. It is the place where he lives and to which he returns for sleep and which forms the Centre of his existence. Dwelling may be a house or part of a house and even a single room as a part of a house, may be a dwelling. However, the use a person makes of it when living there depends on his mode of life. Such a place does not cease to be a ‘dwelling’ merely because one takes all or some of one’s meals out; or brings take-away food in to the exclusion of home cooking: or at times prepares some food for consumption on heating devices.
For example, rooms in colleges at the universities in which unmarried fellows live are dwelling house even if the fellows do not prepare their own meals or cook in their rooms. Such rooms may lack cooking facilities and, even, running water and the fellows eat in hall or bring meals from college kitchens, but, such rooms continue to be dwelling house. A bed-sitting room which a tenet occupies as his home may be a dwelling. A room can be regarded as “home” and, consequently, a dwelling house even if there is no bed therein, as the person may sleep in an armchair, or in blankets on the floor.
2.6 From the above interpretation of the court, it can be concluded that, any premises, which can be used as residence for stay, can be termed as residential dwelling and which may be for long term. A hostel is clearly fitting into the parameters of Residential Dwelling. In addition to this, the hostels are normally for longer stay say – a year.
2.7 The exemption given in Sr.No. 12, is similar to relaxation available in service tax regime as well. The exemption was introduced by the Government under GST, as it is, even without altering single word in the entry. The only difference is that, the relaxation from Service Tax was given to the “services by way of renting of residential dwelling for used as residence” by including it into the negative list i.e. Clause (m) of Section 66D of Finance Act, 1994; whereas the said service is exempted under GST by issuing the notification under section 11 of COST / SGST Act 2017.
2.8 Hence it can be concluded that the nature of residential accommodation expected under Sr. No. 12 is long term accommodation other than the stay in lodging, hotels, etc. which are mainly meant for temporary or short term accommodation. Therefore, stay in hostel is covered by Sr. 12 of Notification No. 12/2017- Central Tax (Rate) mentioned above and hence not liable for GST.
2.9 Under Sr. No. 14 exemption of the same notification, exemption is available for Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having value of supply of a unit of accommodation below one thousand rupees per day or equivalent. This exemption was also available under Service Tax regime as – “Services by hotel, inn, guest house, club, campsite by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation belowrupees one thousand per day or equivalent”.
2.10 Thus there is no difference in the exemption /relaxation given under Finance Act 1994 and that of exemption granted under GST, with respect to short term accommodation and renting of immovable property.
2.11 The activity of the applicant falls under renting for residential purpose which is indicated by the express clarification issued by CBEC in Education Guide on Service Tax dated 20/06/2012 at para 4.13.3. v which is reproduced below:
Q. Furnished flats given on rent for such renting as residential dwelling for the temporary stay (a few days)
Clarification: such renting as residential dwelling for the temporary stay (a few days) bonafide use of a person or his family for a reasonable period shall be residential use; but if the same is given for a short stay for different persons over a period of time the same would be liable to tax (emphasis supplied)
2.12 Hence from the combined reading of the above exemptions / relaxation and various references under Finance Act 1994 it seems Serial Number 12 of Notification No. 12/2017- Central Tax (Rate) is applicable for the renting of immovable property in the instant case.
Statement contain ins the Applicant’s interpretation of law and/or facts
2.13 From the above it seems Serial Number 12 of Notification No. 12/2017- Central Tax (Rate) is applicable for the renting of immovable property in the instant case. Therefore the activity by way of providing hostel facility is eligible for exemption under entry No. 12 of Notification No. 12/2017- Central Tax (Rate) which is produced as below
