Students’ welfare association – 2019 (24) G.S.T.L. 109 (A.A.R. – GST – Maharashtra)

Hostel accommodation provided by the Trusts to students is not covered within the definition of charitable activities and hence, not exempt from GST under Entry No. 1 of Notification No. 12/2017-CT (rate). 

Facts: The applicant is a registered charitable Trust having section 12AA and section 80G certificate of exemption under income-tax Act, 1961, since 1973. Trust activity, is exclusively connected with students and education. Applicant is not a registered person under the GST ACT. The applicant is offering a bouquet of services that consists of lodging and boarding facilities and education and its facilities to students, besides compulsory personality development training which includes computer awareness activities such as, developing skills to operate the computers, training for development of communication skills in English and other foreign languages. The applicant trust, meets its expenses by charging nominal fee to the students and from donations collected from the public.

Issue: Whether the hostel accommodation provided by Trusts to students is covered within the definition of Charitable Activities and thus, exempt under SI. No. 1 of Notification No.12/2017-CT (Rate). Also, whether different treatment would be required for use of hostel rooms given by the trust for residential purposes but ultimately been used by the hirer for commercial use. 

Held: The Authority of advance Ruling held as under:

  • From the Notification Entry No. 1 and the meaning assigned to the expression’ charitable activities’ in section 2(r), it is found that activities of the Trust in providing hostel accommodation facilities to the students who come to Pune for education do not fall within the ambit of charitable activities.
  • This conclusion is in conformity with the clarification issued by the Tax Research Unit vide Circular No. 32/06/2018-GST, dated 12-2- 2018 which provides that Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of Notification No. 12/2017-CT (Rate). However, services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. Hence, in view of this clarification it is held that hostel accommodation provided by Trusts to students is not covered by exemption Notification Entry No.1 of Notification No. 12/2017-CT (Rate).
  • Further, as per the clarification issued vide circular No. 32/06/2018-GST, dated 12-2-2018, it is found that the distinction between services by a hotel, inn guest house club or campsite, by whatever name called, for residential or lodging purposes and Hostel accommodation services is done away. In the instant case applicant submits that during the vacation period hostel is offered for residential purpose and hired for labourers of a commercial organization. Entry Sr. No. 14 of the Notification No. 12/2017 has to be referred to, to ascertain whether different treatment would be required for use of hostel rooms given for residential purposes and commercial purposes.
  • On scrutiny of above exemption, the authority found that if accommodation is used for residential or lodging purpose then it is immaterial who the user is. The service provided by such hostel for residential & lodging purpose would be covered by scope of notification entry where the declared tariff of a unit of an accommodation is below 1000 per day. Therefore, the scope of entry is restricted to use of accommodation unit for residential & lodging purpose and the same is exempt under Entry N. 14 of Notification No. 12/2017-CT (rate).

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