Levy of GST- The present appeal has been filed by the appellant agaisnt the advance ruling order.

The Appellant is a Society registered under Societies registration Act, 1860. The Appellant is running a CBSE affiliated school from class 3rd to 12th and registered under GST law. The appellant is also the sponsoring body of Mody University of Science & Technology (hereinafter referred as MUST). Appellant is considering a proposal to allow the students of MUST to use the ‘Hostel Accommodation’ in its surplus infrastructure which includes Hostel Seat for the students along with serving meals (Food & Beverages) including Breakfast, Lunch and Dinner.

Appellant will directly charge ‘Boarding and Lodging Charges’ from the students of MUST. ‘Boarding and Lodging charges’ shall be based on the type of ‘Hostel Seat’ opted by the student of MUST. 

Appellant filed an application before the Rajasthan Authority for Advance Ruling (AAR) to seek an Advance Ruling “Whether Hostel facility which includes Lodging and Boarding service provided by appellant to the students of MUST having value of service upto Rs.1000/- per day would be eligible for exemption under entry no. 14 of the notification 12/2017 CTR Dt. 28-06-2017?”

Rajasthan Authority for Advance Ruling (AAR) has observed that the Service provided by appellant to students of MUST is a mixed supply under section 2 (74) and not a composite supply under Section 2 (30). Further AAR has considered ‘Room as a ‘Unit of Accommodation’ for exemption upto Rs.1000/- per day and passed Ruling that the applicant would not be eligible for exemption under entry no. 14 of the Notification No. 12/2017 Central Tax (Rate), dated 28.06.2017.

Aggrieved by the ruling the appellant filed present appeal.

The Rajasthan Authority for Advance Ruling has held that naturally bundled services are those services wherein one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. If current nature of supply of services is tested based on above factors, it can be ascertained that the provision of hostel accommodation could be a principal supply but ancillary service food cannot be said to arise naturally with the principal service of hostel accommodation and therefore are not bundled naturally with principal supply. This authority find that in the present case, others services being provided by the Appellant are not naturally bundled or ancillary to Hostel service as the inhabitants of Hostel seats can avail these services from any other source. In fact the inhabitants have been restricted from sourcing these other services from any other person. Consequently, the inhabitants have to avail these services from the Appellant. In such situations we are of the view that the other services are not ancillary to or bundled with the Hostel service.

Further the appellant has contested that in this case, the Unit of Accommodation is a ‘Hostel Seat’. Per unit of accommodation has not been defined in GST anywhere. There is many ways to fix the tariff in the business of accommodation service. Authority for Advance Ruling has considered room as the unit of accommodation. In this regard this authority have contrary view as legislature has used the term ‘per unit of accommodation’ instead of other criteria. The word ‘per unit of accommodation’ should be understood as per general practice adopted by large number of service provider in similar business model. In hotels, generally it fixes per room, per suit whereas in hostels, inns and dharmshalas, it fixes per room, per bed, per seat and per person.

Held that- This authority agrred with the contention of appellant and finds that hostel seat should be considered as a unit of accommodation.