Hostel Accommodations provided to old students who stay for one or two months during the vacation period, are also eligible for the exemption

Facts of the Case: The applicant argues that the hostel accommodation services provided, which include mess facilities, room amenities, and other utilities, constitute a composite supply. The principal supply in this composite supply is the hostel accommodation service, which is essentially a renting service. The term “residential dwelling” is not explicitly defined in the CGST Act, 2017. However, based on dictionary definitions and past guidance from CBIC, the applicant asserts that a “residential dwelling” is any residential accommodation used for long-term residence. The applicant argues that the hostel, where students live for the academic year or based on their educational needs, qualifies as a residential dwelling, as it serves as the students' residence during their course of study.

Further, The applicant argues that the hostel accommodation is used by students as their residence during the academic year, fulfilling the third condition. This argument is supported by the Supreme Court's interpretation of the term “residence,” which implies a place where one lives for a considerable period.

Referred he case of Taghar Vasudeva Ambrish vs. Appellate Authority for Advance Ruling, Karnataka, Bangalore, where it was held that the hostel accommodation provided to students or working professionals qualifies as a “residential dwelling” under the GST exemption notification. This ruling is used to substantiate the claim that the hostel accommodation services provided by the applicant should also be exempt from GST under the relevant notification.

Issue:- i. Whether hostel accommodation services to students with mandatory meals and other amenities for a duration of 10 months qualifies for exemption under Serial Number 12 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017

ii. Whether 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 old students who are already staying for the month of 10 months by separate contract and payment, exempted under GST.

iii. Whether 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, exempted under GST.

Rulings: –The AAR ruled as under

Exemption Eligibility for Hostel Accommodation

1. For Duration of 10 Months: Hostel accommodations provided for a duration of 10 months are eligible for exemption under Serial Number 12 of the notification.
2. For Old Students: Accommodations provided to old students who stay for one or two months during the vacation period are also eligible for the exemption.
3. For New Students: Accommodations provided to new students who stay for one or two months during the vacation period do not qualify for the exemption.