Circular No. 32/06/2018-CGST, (F. No. 354/17/2018-TRU), Clarifications regarding GST in respect of certain services

Circular No. 32/06/2018-GST
F. No. 354/17/2018-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
Room No. 146G, North Block,
New Delhi, 12th February 2018
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)
Subject: Clarifications regarding GST in respect of certain services
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:-
Issue Clarification
1. Is hostel accommodation provided by
Trusts to students covered within the
definition of Charitable Activities and
thus, exempt under Sl. No. 1 of
notification No. 12/2017-CT (Rate).
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. [Sl. No. 14 of
notification No. 12/2017-CT(Rate) refers]
2. Is GST leviable on the fee/amount
charged in the following
situations/cases: –
(1) A customer pays fees while
registering complaints to Consumer
Disputes Redressal Commission
office and its subordinate offices.
Services by any court or Tribunal
established under any law for the time
being in force is neither a supply of goods
nor services. Consumer Disputes Redressal
Commissions (National/ State/ District)
may not be tribunals literally as they may
not have been set up directly under Article
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These fees are credited into State
Customer Welfare Fund’s bank
(2)Consumer Disputes Redressal
Commission office and its
subordinate offices charge penalty
in cash when it is required.
(3) When a person files an appeal to
Consumers Disputes Redressal
Commission against order of
District Forum, amount equal to
50% of total amount imposed by the
District Forum or Rs 25000/-
whichever is less, is required to be
323B of the Constitution. However, they
are clothed with the characteristics of a
tribunal on account of the following: -
(1) Statement of objects and reasons as
mentioned in the Consumer Protection
Bill state that one of its objects is to
provide speedy and simple redressal to
consumer disputes, for which a quasijudicial
machinery is sought to be set
up at District, State and Central levels.
(2) The President of the District/
State/National Disputes Redressal
Commissions is a person who has
been or is qualified to be a District
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
(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
camel ride, rickshaw ride and boat ride
Elephant/ camel joy rides cannot be
classified as transportation services. These
Circular No. 32/06/2018-GST
should be classified under heading
9964 (as passenger transport service) in
which case, the rate of tax on such
services will be 18% or under the
heading 9996 (recreational, cultural and
sporting services) treating them as joy
rides, leviable to GST@ 28%?
services will attract GST @ 18% with
threshold exemption being available to
small service providers. [Sl. No 34(iii) of
notification No. 11/2017-CT(Rate) dated
28.06.2017 as amended by notification No.
1/2018-CT(Rate) dated 25.01.2018 refers]
4. What is the GST rate applicable on
rental services of self-propelled access
equipment (Boom Scissors/
Telehandlers)? The equipment is
imported at GST rate of 28% and leased
further in India where operator is
supplied by the leasing company, diesel
for working of machine is supplied by
customer and transportation cost
including loading and unloading is also
paid by the customer.
Leasing or rental services, with or without
operator, for any purpose are taxed at the
same rate of GST as applicable on supply
of like goods involving transfer of title in
goods. Thus, the GST rate for the rental
services in the given case shall be 28%,
provided the said goods attract GST of
28%. IGST paid at the time of import of
these goods would be available for
discharging IGST on rental services. Thus,
only the value added gets taxed. [Sl. No
17(vii) of notification No. 11/2017-
CT(Rate) dated 28.6.17 as amended
5. Is GST leviable in following cases:
(1) Hospitals hire senior doctors/
consultants/ technicians
independently, without any contract
of such persons with the patient; and
pay them consultancy charges,
without there being any employeremployee
relationship. Will such
consultancy charges be exempt from
GST? Will revenue take a stand that
they are providing services to
hospitals and not to patients and
hence must pay GST?
(2)Retention money: Hospitals charge
the patients, say, Rs.10000/- and pay
to the consultants/ technicians only
Rs. 7500/- and keep the balance for
providing ancillary services which
include nursing care, infrastructure
facilities, paramedic care,
emergency services, checking of
temperature, weight, blood pressure
Health care services provided by a clinical
establishment, an authorised medical
practitioner or para-medics are exempt. [Sl.
No. 74 of notification No. 12/2017-
CT(Rate) dated 28.06.2017 as amended
(1) Services provided by senior doctors/
consultants/ technicians hired by the
hospitals, whether employees or not,
are healthcare services which are
(2) Healthcare services have been defined
to mean any service by way of
diagnosis or treatment or care for
illness, injury, deformity, abnormality
or pregnancy in any recognised
system of medicines in India[para
2(zg) of notification No. 12/2017-
CT(Rate)]. Therefore, hospitals also
provide healthcare services. The
entire amount charged by them from
the patients including the retention
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etc. Will GST be applicable on such
money retained by the hospitals?
(3) Food supplied to the patients:
Health care services provided by the
clinical establishments will include
food supplied to the patients; but
such food may be prepared by the
canteens run by the hospitals or may
be outsourced by the Hospitals from
outdoor caterers. When outsourced,
there should be no ambiguity that
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.
money and the fee/payments made to
the doctors etc., is towards the
healthcare services provided by the
hospitals to the patients and is exempt.
(3) Food supplied to the in-patients as
advised by the doctor/nutritionists is a
part of composite supply of healthcare
and not separately taxable. Other
supplies of food by a hospital to
patients (not admitted) or their
attendants or visitors are taxable.
6. Appropriate clarification may be issued
regarding taxability of Cost Petroleum.
As per the Production Sharing
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
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.
Yours Faithfully,
Harsh Singh
Technical Officer (TRU)