Brief facts:
The applicant is in the business of providing boarding and lodging to the students undergoing Vocational program training for healthcare sector. The advance ruling is sought on whether the service provided by them falls under supply of accommodation as they are charging only Rs.300/- per day.
Questions raised:
What is the applicable GST Rate and SAC for the supply of service in this application?
The students are charged Rs.9000/- per candidate per month out of which Rs.3500/- is towards rent for accommodation at fixed cost and Rs.5500/- towards food on head count/actual number of candidates. This means that the price is variable to the extent of food supplied and this is not a single price the customer pays, no matter how much of the package is actually received. Therefore, the two supplies are not integral to one another.
As there are two distinct supplies in this contract one for accommodation and the other for food.
Is it a composite supply or a mixed supply?
Composite supply is comprising two or more goods/services, which are naturally bundled and supplied with each other in the ordinary course of business, one of which is a principal supply. The items cannot be supplied separately whereas mixed supply is a combination of two or more goods or services made together for a single price.
The Authority for Advance Rulings, Telangana ruled that there are two distinct supplies in this contract as one for accommodation and the other for food. Therefore, it is neither a composite supply nor a mixed
supply.
Our Comments:
This is a common practice with entities providing boarding and food facility to students to charge consolidated amount. However, as these are not naturally bundled services therefore, it is better to treat both the services separately, if exemption on accommodation service is to be claimed, else, in case no bifurcation has been made, the authorities might qualify the services as mixed supply and hence, the entire value can be made taxable.
