2024-VIL-261-MAD
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SGST High Court Cases

GST - Liability of GST on renting of hostel rooms for residential purpose – Rendering of services by way of ‘renting of residential dwelling for use as residence' - Meaning of term “residential dwelling unit” - Whether the hostel and residential accommodation extended by the assessee-hostel would be eligible for exemption under Entry 12 of exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 dated 28.06.2017 – Petitioners of the contention that hostels would fall within the purview of 'residential dwelling' occurring in Entry 12 of Exemption Notification No.12/2017, dated 28.06.2017 and thereby, exempted from levy of GST whereas in the impugned order the Appellate Authority for Advance Ruling concluded that hostel building cannot be considered as residential dwelling, but a non-residential complex, hence hostel accommodation supplied by assessee are not eligible for exemption - HELD - the expression ‘residence’ and ‘dwelling’ have more or less the connotation in common parlance and therefore, no different meaning can be assigned to the expression ‘residential dwelling’ and accordingly, the term ‘residential dwelling’ includes hostel which is used for residential purposes by students or working women - From the term 'services by way of renting of residential dwelling for use as residence' contained in the exemption Notification, it is clear that the services provided by way of renting of residential dwelling for residential purpose are covered under the exemption. Therefore, the AAAR ought to have dealt with the matter in regard to the services provided by the petitioners by renting out the hostel rooms to the girl students and working women and whether such services are in the nature of residential or commercial in order to find out whether the petitioners are entitled to the exemption. But AAAR has dealt with the matter pertaining to the building/premises let out by the petitioners and compared the same with that of the hotels and came to the conclusion that the building/premises rented out by the petitioners are not residential dwelling for use as residence - GST is not applicable if a residential property is rented out to any persons in their personal capacity and for use as their own residence i.e., if a residential property is rented out, that too for residential purpose, then the rental income derived from such property does not attract GST - the word “residential dwelling” referred in Entry No.12 of the Exemption Notification No.12 of 2017 would include the hostel facilities provided by the petitioners to the working women, students, professional, etc. For the working women and professionals also, the said hostel room is residential dwelling unit for them - the imposition of GST on the Hostel accommodation should be viewed from the perspective of the recipient of service and not from the perspective of service provider – the 'hostel services' provided by the petitioners to the girl students and working women will squarely amount to the 'residential dwelling' and accordingly, the same will be squarely covered under the Entry No.12 of Exemption Notification No.12 of 2017 – the impugned orders passed by the Appellate Authority for Advance Ruling is set aside the writ petitions are allowed - Authorities have to look into the aspect as to whether the particular place is a dwelling unit or not. When such being the case, since the hostellers are staying in the room for months together, it cannot be construed as non-residential unit and certainly it is a residential dwelling as provided in the Entry No.12 of Exemption Notification No.12 of 2017. Thus, the 'hostel services' provided by the petitioners would squarely fall within purview of Entry No.12 of Exemption Notification No.12 of 2017. Further, in the present case, no commercial activities can be attributed against the owners of the hostels since they have been providing only 'residential accommodation' to the girl students, working women, etc., who are using the 'hostel premises' as their residence and not for business purpose - While adverting to the imposition of GST on hostel accommodation, it has to be looked into as to whether the inmates of the hostel rooms, are using the premises as their residential dwelling or commercial purpose since renting of residential unit attracts GST only when it is rented for commercial purpose. So, in order to claim exemption of GST, the nature of the end-use should be 'residential' and it cannot be decided by the nature of the property or the nature of the business of the service provider, but by the purpose for which it is used i.e. 'resident dwelling' which is exempted from GST. Therefore, this Court is of the considered view that the issue of levy of GST on residential accommodation should be viewed from the perspective of recipient of service and not from the perspective of service provider, who offers the premises on rental basis.
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