Maharashtra Authority for Advance Ruling (MahaGST): The Bench of Rajiv Magoo, Joint Commissioner of Central Tax and T.R. Ramnani, Joint Commissioner of State Tax decided that GST is exempted on Hostel Rent of less than Rs 1000 per day per student.
Questions for Consideration:
- 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)?
- If it is exempt it shall be claimed as exempted under Serial Number 12 or Serial Number 14 of Notification 12/2017 – Central Tax (Rate) (as amended time to time) dated 28-06-2017?
Factual Background
Applicant was registered under the CGST Act, 2017 and provided commercial training and coaching service for students appearing for 11th and 12th standards who are desirous of appearing for IIT, etc., specifically in science stream.
Applicant also provided hostel facility to the students on demand basis and charged them additionally. The said service of hostel was optional and not coming in the form of package.
Under GST, exemptions for services were notified vide Notification No. 12/2017 – Central Tax (Rate) dated 28-06-2017, as amended time to time. In the said notification in Serial Number 12 exemption was provided for “Services by way of renting of residential dwelling for use as residence.”
However, ‘Residential Dwelling’ was not defined in the Act and in exemption notification as well. Therefore, the meaning of the 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 a temporary stay.
Further, as per the applicant, exemption was available under Sr. No. 14 of Notification 12/2017 – C.T. (Rate) dated 28-6-2017 as amended, 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.
Analysis, Law and Decision
Bench observed that the term “residential dwelling” is not defined under the GST Act. But in common parlance it is to be called as ‘A house or an apartment or other places of residence or a place to live in or building or other places to live in.’
The activity of providing the hostel on rent to various students is covered under ‘services’. The hostels are exclusively meant for temporary residence for students during the time period of training and coaching only.
Applicant was also providing hostel facilities to the students who were not their own institutional students.
In view of the above, Bench opined that the criteria for residential dwelling under the common parlance teste are not satisfied.
In the case of residential dwelling, there is no embargo in respect of visits and stay by friends, relatives, etc. The period of stay in the residential dwelling is specified in the agreement.
Further, it was noted that the Hostel room which is usually allotted on sharing basis to 3 students is for a period which is usually more than 3 months. The rooms in hostel are let out to the students for residential and study purpose only, that too during the training and coaching periods. The said are the basic differences between a residential dwelling and a Hostel.
In view of the above, the subject activity was not covered under Entry 12 of the said notification.
Therefore, hostel accommodation provided by the applicant was not covered under the exemption Notification.
Furthermore, the subject activity would be exempted from taxes as per Entry No. 14 of said notification. The fees charged per student per day per room was much less than Rs 1000.
Conclusion
- 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)?
Answer: Affirmative
- If it is exempt it shall be claimed as exempted under Serial Number 12 or Serial Number 14 of Notification 12/2017 – Central Tax (Rate) (as amended time to time) dated 28-06-2017?
Answer: Present activity of the applicant is exempted under Serial Number 14 of Notification No. 12/2017 – C.T. (Rate) dated 28-06-2017 as amended from time to time.[Ghodawat Eduserve LLP, In Re; ARA 72/2019-20/ /B-51, decided on 27-8-2021]