Applicability of GST on Hostel accommodation provided by Trusts to students – AAR
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
IN RE: M/S. STUDENTS’ WELFARE ASSOCIATION
Charitable Activities or not – hostel accommodation provided by Trusts to students – exemption under Sl. No. 1 of N/N. 12/2017-CT (Rate) – donations received to meet the expenses for running the hostel – levy of GST.
Whether hostel accommodation provided by Trusts to students is covered within the definition of Charitable Activities and thus, exempt under Sl. No. 1 of notification No.12/2017-CT (Rate)? – Held that:- From the Notification Entry no. 1 and the meaning assigned to the expression’ charitable activities’, 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 is in conformity with the clarification issued by the Tax Research Unit vide Circular No. 32/06/2018-GST dated 12th February 2018 – the hostel accommodation provided by Trusts to students is not covered by exemption Notification Entry No.1 of Notification No. 12/2017-CT (Rate).
Whether different treatment would be required for use of hostel rooms given by us for residential purposes but ultimately been used by the hirer for commercial use? – Held that:- As per the clarification issued vide Circular No. 32/06/2018-GST dated 12th February 2018, that the distinction between services by a hotel, inn guest house club or composite, by whatever name called, for residential or lodging purposes and Hostel accommodation services is done away. In the present case applicant submits that during the vacation period hostel is offered for residential purpose and hired for labourers of a commercial organization – the description of service is use based, meaning that if the accommodation is used for residential or lodging purpose then it is immaterial who the user is. The services provided by such hostel, for residential and lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of an accommodation is below one thousand rupees per day. Therefore the scope of the entry is restricted to use of the accommodation unit for residential and lodging purpose.
Whether the said notification would be applicable if the accommodation if decided to be given for commercial purposes in future whether the activity still would be able to enjoy exemption under said notification? – Held that:- We reiterate the scope of exemption entry 14 of the Notification 12/2017 which is applicable to accommodation unit when used only for residential or lodging purpose.
Whether the large donations given by the donors would be treated as ‘service and taxed accordingly and whether only sponsored donations are believed to be covered under said mega exemption notification? – Held that:- Even though the concept is explained in the context of the Charitable Religious Trust, we find that the principle that emerges from it is equally applicable to the case at hand and that if the income is in nature of donation received without any instructions, then it would not be subject to GST – the donations received without any instruction would not be taxable however where the donor is clearly receiving identifiable benefits in return either in terms of advertising or publicity, the said donation amount received is to be treated as a consideration for supply of goods or services or both and liable to GST.
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