Hostel Facilities provided to Existing Students during Vacation Periods also Eligible for GST Exemption: AAR [Read Order]
Maharashtra AAR Clarifies GST Exemption on Hostel Accommodations by Maharashtra Jain Education Society
AAR – GST – Hostel facilities to students – GST Exemption – Authority for Advance Rulings – Central Tax – taxscan
AAR – GST – Hostel facilities to students – GST Exemption – Authority for Advance Rulings – Central Tax – taxscan
The Authority for Advance Rulings ( AAR ), Maharashtra has clarified the tax exemption status for hostel accommodations provided by the society under Notification 12/2017- Central Tax ( Rate ) dated June 28, 2017 with respect to
1. Hostel Accommodation for 10 Months: Hostel accommodations provided for a duration of 10 months are eligible for tax exemption under Serial Number 12 of the notification.
2. Old Students During Vacation: Accommodations offered to old students who extend their stay for one or two months during the vacation period also qualify for the exemption.
3. New Students During Vacation: Accommodations provided to new students for one or two months during the vacation period do not qualify for the exemption.
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Background of the Case:
The applicant, Maharashtra Jain Education Society, argued that the hostel accommodation services they provide, which include meals, room amenities, and other utilities, constitute a composite supply with the principal supply being the rental service of the hostel accommodation.
They contended that the hostel serves as a "residential dwelling" for students, who reside there for the academic year, meeting the conditions for GST exemption.
The applicant further supported their claim by referring to a previous case, Taghar Vasudeva Ambrish vs. Appellate Authority for Advance Ruling, Karnataka, Bangalore, where it was held that hostel accommodation for students qualifies as a "residential dwelling" under the GST exemption notification.
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The authority bench examined –
1. Whether hostel accommodation services to students, including mandatory meals and amenities, for a duration of 10 months, qualify for GST exemption under Serial Number 12 of Notification No. 12/2017-Central Tax ( Rate ),
2. Whether hostel accommodations for old students, who stay for an additional one to two months during the vacation period with a separate contract and payment, qualify for GST exemption and
3. Whether hostel accommodations for new students, who stay for one to two months during the vacation period, are exempt from GST?
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The applicant submitted that the fees for hostel accommodation services charged from the student is Rs. 10,000 per month for the vacation period from 1st May to 30th June as per the needs of the students either for examination or for undergoing educational courses. In this case also, a refundable Security Deposit of Rs. 10,000 is taken from the students. A sample copy of the receipt of hostel fees for the vacation period from the student was submitted on record.
Preliminary hearing in the matter was held on 09.05.2024. Mr. Nitin Shah, Advocate appeared and requested for admission of the application. Jurisdictional Officer Mr. M.A. Bhagat, Deputy Commissioner of State Tax Also appeared.
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The application was admitted and called for final hearing on 26.06.2024. Mr. Nitin Shah, Advocate, Authorised Representative of the applicant, appeared and made oral and written submissions. Jurisdictional Officer Mr. M.A. Bhagat, Deputy Commissioner of State Tax Also
appeared. Both sides were heard by the authority bench.
It was noted that, “The applicant is providing accommodation services in hostel run by the society and such services are provided only to the students studying in 11th Standard up to Graduation only.
Duration of stay in hostel for the academic year is for 10 months i.e. from June to March and for vacation period duration of stay is a month or two on monthly basis.
Accommodation services are provided to the students on sharing basis with common amenities fees are charged for 10-month periods at Rs. 1,10,000/- and for vacation period Rs. 10000/- per month. Receipts dated 01-06-2022 and 03-06-2022 are submitted for record.
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These fees include meals i.e., breakfast, lunch and dinner in mess. Mess facilities are compulsory and not optional.
The hostel has strict regulation about timing discipline behaviour expected from students and absence of students from the hostel without permission is not allowed.
A bundle of all these services provided by the hostel to the students' single receipt is issued and single price is charged and break up of individual supplies is not shown separately in receipt, the authority observed.
In the backdrop of these facts and relevant provision of GST Act and notification no. 12/2017
Central Tax ( Rate ) dated 28th June 2017. The applicant has raised question as under: -
"Whether the hostel accommodation services provided by the Applicant would be eligible for exemption under Serial Number 12 of Notification No. 12/2017- Central Tax ( Rate ) dated 28th June 2017?"
Hereinafter the exemption at Sr No 12 of the Notification No 12/2017-Central Tax ( Rate ) dated 28th June 2017 are referred as "the said entry' and the Notification as "the Exemption Notification".
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The authority asserted that, based on the duration of stay the supply of services can be divided into three broad categories:
- Duration of stay of 10 months.
- Duration of stay of one to two months during the vacation periods to new Students.
- Duration of stay of one to two months during the vacation periods for old students who have already stayed in a hostel for a duration of 10 months.
Therefore, the question raised by the applicant was trifurcated in to 3 parts depending on the
aforesaid duration of stay and its combinations and such 3 reframed questions were answered by the tribunal.
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The bench noted with respect to the first question that, “we have no hesitation in following the decision of Madras High court in case of Thai Mookambikaa Ladies Hostel - in deciding that Supply of hostel accommodation services to students with mandatory supply of meals and other necessary amenities, for duration of stay of 10 months- is covered by the Entry at Sr No 12 of Notification 12/2017- Central tax ( Rate ) dated 28th June 2017 and exempted from tax.”
With respect to the second issue, it was noted that, “that Supply of hostel accommodation services to students with mandatory supply of meals and other necessary amenities, for duration of stay of 1 to 2 months during vacation period to new students, is not eligible for benefits of exemption as per Entry at Sr No 3 of notification No 12/ 2017- CentraI tax ( Rate ) dated 28 June 2017.”
With regard to the third issue, the tribunal noted that, “It is seen that the earlier tenure of residence of 10 months is extended for further period of one month or 2 months by the old student will not change the nature of their earlier stay of 10 months ( Residence ) to temporary accommodation status hence, such supplies considering the earlier tenure 10 months will also be long term tenure and are considered as residence and eligible for benefits of exemption as per Entry at Sr No 3 of notification No 12/ 2017-Central tax ( Rate ) dated 28 June 2017.”
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