Circular No. 32/06/2018-GST [C10-157]

I am directed to issue clarification with regard to the following issues approved by the GST Council in its 25th meeting held on 18th January 2018:-

S. Issue Clarification No.

1. Is hostel accommodation provided by Hostel accommodation services do not fall Trusts to students covered within the within the ambit of charitable activities as definition of Charitable Activities and defined in para 2(r) of notification No. thus, exempt under Sl. No. 1 of 12/2017-CT(Rate). However, services by a notification No. 12/2017-CT (Rate). 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. [Sl. No. 14 of notification No. 12/2017-CT(Rate) refers]

2. Is GST leviable on the fee/amount Services by any court or Tribunal charged in the following established under any law for the time situations/cases: – being in force is neither a supply of goods (1) A customer pays fees while nor services. Consumer Disputes Redressal registering complaints to Consumer Commissions (National/ State/ District) Disputes Redressal Commission may not be tribunals literally as they may office and its subordinate offices. not have been set up directly under Article

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Circular No. 32/06/2018-GST

These fees are credited into State 323B of the Constitution. However, they Customer Welfare Fund’s bank are clothed with the characteristics of a account. tribunal on account of the following: - (2) Consumer Disputes Redressal (1) Statement of objects and reasons as Commission office and its mentioned in the Consumer Protection subordinate offices charge penalty Bill state that one of its objects is to in cash when it is required. provide speedy and simple redressal to (3) When a person files an appeal to consumer disputes, for which a quasi- Consumers Disputes Redressal judicial machinery is sought to be set Commission against order of up at District, State and Central levels. District Forum, amount equal to (2) The President of the District/ 50% of total amount imposed by the State/National Disputes Redressal District Forum or Rs 25000/- Commissions is a person who has whichever is less, is required to be been or is qualified to be a District paid. Judge, High Court Judge and Supreme Court Judge respectively. (3) These Commissions have been vested with the powers of a civil court under CPC for issuing summons, enforcing attendance of defendants/witnesses, reception of evidence, discovery/production of documents, examination of witnesses, etc. (4) Every proceeding in these Commissions is deemed to be judicial proceedings as per sections 193/228 of IPC. (5) The Commissions have been deemed to be a civil court under CrPC. (6) Appeals against District Commissions lie to State Commission while appeals against the State Commissions lie to the National Commission. Appeals against National Commission lie to the Supreme Court. In view of the aforesaid, it is hereby clarified that fee paid by litigants in the Consumer Disputes Redressal Commissions are not leviable to GST. Any penalty imposed by or amount paid to these Commissions will also not attract GST.

3. Whether the services of elephant or Elephant/ camel joy rides cannot be camel ride, rickshaw ride and boat ride classified as transportation services. These

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Circular No. 32/06/2018-GST

should be classified under heading services will attract GST @ 18% with 9964 (as passenger transport service) in threshold exemption being available to which case, the rate of tax on such small service providers. [Sl. No 34(iii) of services will be 18% or under the notification No. 11/2017-CT(Rate) dated heading 9996 (recreational, cultural and 28.06.2017 as amended by notification No. sporting services) treating them as joy 1/2018-CT(Rate) dated 25.01.2018 refers] rides, leviable to GST@ 28%?

4. What is the GST rate applicable on Leasing or rental services, with or without rental services of self-propelled access operator, for any purpose are taxed at the equipment (Boom Scissors/ same rate of GST as applicable on supply Telehandlers)? The equipment is of like goods involving transfer of title in imported at GST rate of 28% and leased goods. Thus, the GST rate for the rental further in India where operator is services in the given case shall be 28%, supplied by the leasing company, diesel provided the said goods attract GST of for working of machine is supplied by 28%. IGST paid at the time of import of customer and transportation cost these goods would be available for including loading and unloading is also discharging IGST on rental services. Thus, paid by the customer. only the value added gets taxed. [Sl. No 17(vii) of notification No. 11/2017- CT(Rate) dated 28.6.17 as amended refers].

5. Is GST leviable in following cases: Health care services provided by a clinical (1) Hospitals hire senior doctors/ establishment, an authorised medical consultants/ technicians practitioner or para-medics are exempt. [Sl. independently, without any contract No. 74 of notification No. 12/2017- of such persons with the patient; and CT(Rate) dated 28.06.2017 as amended pay them consultancy charges, refers]. without there being any employer- (1) Services provided by senior doctors/ employee relationship. Will such consultants/ technicians hired by the consultancy charges be exempt from hospitals, whether employees or not, GST? Will revenue take a stand that are healthcare services which are they are providing services to exempt. hospitals and not to patients and (2) Healthcare services have been defined hence must pay GST? to mean any service by way of (2) Retention money: Hospitals charge diagnosis or treatment or care for the patients, say, Rs.10000/- and pay illness, injury, deformity, abnormality to the consultants/ technicians only or pregnancy in any recognised Rs. 7500/- and keep the balance for system of medicines in India[para providing ancillary services which 2(zg) of notification No. 12/2017- include nursing care, infrastructure CT(Rate)]. Therefore, hospitals also facilities, paramedic care, provide healthcare services. The emergency services, checking of entire amount charged by them from temperature, weight, blood pressure the patients including the retention

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Circular No. 32/06/2018-GST

etc. Will GST be applicable on such money and the fee/payments made to money retained by the hospitals? the doctors etc., is towards the (3) Food supplied to the patients: healthcare services provided by the Health care services provided by the hospitals to the patients and is exempt. clinical establishments will include (3) Food supplied to the in-patients as food supplied to the patients; but advised by the doctor/nutritionists is a such food may be prepared by the part of composite supply of healthcare canteens run by the hospitals or may and not separately taxable. Other be outsourced by the Hospitals from supplies of food by a hospital to outdoor caterers. When outsourced, patients (not admitted) or their there should be no ambiguity that attendants or visitors are taxable. the suppliers shall charge tax as applicable and hospital will get no ITC. If hospitals have their own canteens and prepare their own food; then no ITC will be available on inputs including capital goods and in turn if they supply food to the doctors and their staff; such supplies, even when not charged, may be subjected to GST.

6. Appropriate clarification may be issued As per the Production Sharing regarding taxability of Cost Petroleum. Contract(PSC) between the Government and the oil exploration & production contractors, in case of a commercial discovery of petroleum, the contractors are entitled to recover from the sale proceeds all expenses incurred in exploration, development, production and payment of royalty. Portion of the value of petroleum which the contractor is entitled to take in a year for recovery of these contract costs is called “Cost Petroleum”. The relationship of the oil exploration and production contractors with the Government is not that of partners but that of licensor/lessor and licensee/lessee in terms of the Petroleum and Natural Gas Rules, 1959. Having acquired the right to explore, exploit and sell petroleum in lieu of royalty and a share in profit petroleum, contractors carry out the exploration and production of

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Circular No. 32/06/2018-GST

petroleum for themselves and not as a service to the Government. Para 8.1 of the Model Production Sharing Contract (MPSC) states that subject to the provisions of the PSC, the Contractor shall have exclusive right to carry out Petroleum Operations to recover costs and expenses as provided in this Contract. The oil exploration and production contractors conduct all petroleum operations at their sole risk, cost and expense. Hence, cost petroleum is not a consideration for service to GOI and thus not taxable per se. However, cost petroleum may be an indication of the value of mining or exploration services provided by operating member to the joint venture, in a situation where the operating member is found to be supplying service to the oil exploration and production joint venture.

2. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board. Hindi version would follow.