18% GST on Houseboats Used For Cruises, Rules Kerala AAR

The Kerala Authority for Advanced Ruling (AAR) has ruled that 18% GST will be applicable on houseboats used for cruises and day trips, with meals given as a part of the package. The 18% GST rate will apply irrespective of whether it’s given for a day trip or overnight stay.

The applicant, in this case, EVM Motors and Vehicles, is an automobile dealer with 15 automobile brands, showrooms and workshops over Kerala. They had launched ‘La Leela’, a new venture in the hospitality sector in the Alappuzha district. Under this venture, houseboats are furnished with state of the art bedrooms, dining and living rooms, kitchens, etc., and given out for day trips and overnight cruises. Meals are provided to guests and included in the package, while drinks are sold separately.

The applicant had sought an advanced ruling on whether their services fall under Chapter 99, Heading 9964 ‘Passenger Transport Services’ of classification of services, with the service code 996415. The applicant further clarified whether the GST rate applicable would be 18% on the services rendered and the availability of input tax credit.

The Kerala AAR examined the case in detail. The applicant is operating a resort in Alappuzha. The houseboats are being acquired and furnished by them and then given out for cruises and day trips. The boarding point may not be the point of disembarkation. The rate charged is an all-inclusive rate for accommodation, food, transportation, and other incidental services. 

Taking the facts of the case into consideration, the Kerala AAR ruled that the services rendered by the applicant fall under Chapter 99 Heading 9964, which covers passenger transport services. The services are further rightly classified under and the service code 996415 and liable to GST at the rate of 18%. The authority also held that the applicant is eligible to avail input tax credit subject to the conditions listed under Section 16 of the Central Goods and Services Tax Act, 2017.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in