Issues: Whether renting of premises used as hostel accommodation for students falls within the exemption for services by way of renting of residential dwelling for use as residence under Section 66D(m) of the Finance Act, 1994, and whether the refund claim was maintainable.

Analysis: The premises was rented to an educational foundation and was ultimately used for residence by students. The expression "renting of residential dwelling for use as residence" is an activity-specific exemption and does not require the lessee to occupy the premises as its own residence. The authority also noted that the proceedings turned on the correctness of the exemption claim and not on any separate objection that the assessment had not been challenged. The interpretative guidance in the TRU letter and the Supreme Court's ruling on similar language supported a broad construction of the exemption where the ultimate use remained residential.

Conclusion: The rental income was not liable to service tax, and the refund claim was maintainable. The issue is decided in favour of the assessee.

Final Conclusion: The exemption under Section 66D(m) applied to the impugned letting arrangement, and the denial of refund was set aside with consequential relief.

Ratio Decidendi: Where premises rented as residential accommodation are ultimately used as residence, the exemption is attracted irrespective of whether the occupant is the lessee or persons housed through the lessee, because the exemption is activity-specific and not person-specific.

Issues: (i) Whether imported paddy reapers without binder attachment are eligible for concessional duty under Notification No. 12/2012-Cus (Sl. No. 399A) which applies to "Reaper-cum-Binder"? (ii) Whether confiscation of the goods and imposition of redemption fine and penalty under the Customs Act are sustainable?

Issue (i): Whether imported paddy reapers without binder attachment fall within the description "Reaper-cum-Binder" in Notification No. 12/2012-Cus (Sl. No. 399A) for concessional duty.

Analysis: The notification expressly uses the description "Reaper-cum-Binder." The imported machines were admitted to be paddy reapers without binder attachment. Relevant authorities and precedents establish that where the wording of an exemption notification is clear and unambiguous, the benefit is confined to the express language used. Although principles of purposive interpretation and principal-function analysis are recognised, the notification's specific phrasing envisages an integrated machine performing both reaping and binding functions. The applicant did not dispute the absence of the binder attachment.

Conclusion: The imported paddy reapers without binder attachment do not satisfy the description "Reaper-cum-Binder" and are not eligible for the benefit of Notification No. 12/2012-Cus (Sl. No. 399A).

Issue (ii): Whether confiscation under the Customs Act and imposition of redemption fine and penalty are sustainable where the claim for exemption was advanced for paddy reapers declared in the Bill of Entry.

Analysis: Confiscation and penalty provisions apply where there is misdeclaration or deliberate suppression. The goods were correctly declared as paddy reapers and the dispute concerns eligibility for an exemption entry. Precedents recognise that a bona fide but mistaken claim for exemption made under the self-assessment system does not by itself justify confiscation or penalty. The facts show no misdescription of the goods in the Bill of Entry.

Conclusion: Confiscation of the goods and the consequential redemption fine and penalty are not sustainable and are set aside.

Final Conclusion: The appeal is partly allowed: the denial of exemption is upheld and differential duty is maintainable, while confiscation, redemption fine and penalty are quashed.

Ratio Decidendi: Where an exemption notification's language is clear and unambiguous, eligibility is confined to the express description; however, confiscation and penalties under customs law cannot be sustained in the absence of misdeclaration or deliberate suppression where a bona fide but mistaken claim to exemption was made.

Issues: (i) Whether the queries in the applicant's Advance Ruling application (relating to hostel accommodation being a "residential dwelling", applicability of exemption entries and related composite supply and precedent applicability) are admissible for determination under the advance ruling scheme and (ii) Whether the application is liable for rejection under Section 98(2) of the Central Goods and Services Tax Act, 2017.

Issue (i): Whether the queries in the Advance Ruling application are admissible under the definition and scope of "advance ruling" provided in Section 95(a) read with Section 97(2) of the Central Goods and Services Tax Act, 2017.

Analysis: The Authority considered the statutory definition of advance ruling which limits rulings to matters in relation to supply of goods or services being undertaken or proposed to be undertaken by the applicant. The Authority evaluated the applicant's queries and found they primarily seek rulings on activities carried out by the applicant's tenant and on applicability of judgments to the tenant's facts. The Authority also reviewed Section 97(2) which enumerates the types of questions admissible for advance ruling and noted that applicability of case law to facts of another person does not fall within those clauses. The Authority therefore treated the queries as outside the applicant centric scope required by the statutory scheme.

Conclusion: The queries raised are not admissible under the advance ruling provisions because they do not relate to supplies undertaken or proposed to be undertaken by the applicant and fall outside the categories in Section 97(2).

Issue (ii): Whether, in view of the inadmissibility of the queries, the application is liable for rejection under Section 98(2) of the Central Goods and Services Tax Act, 2017.

Analysis: Having found the queries inadmissible, the Authority applied Section 98(2) which authorises the Authority to admit or reject an application after examination and hearing. The Authority noted that an opportunity of hearing was given, the applicant's representatives had an opportunity to submit further material but did not furnish supporting documents that would alter admissibility, and that Section 103(1) limits the binding effect of any ruling to the applicant itself. On these bases the Authority concluded that the application did not qualify for admission and therefore must be rejected under the statutory provision.

Conclusion: The application is rejected under Section 98(2) of the Central Goods and Services Tax Act, 2017.

Ratio Decidendi: An advance ruling is admissible only where the question relates to supply of goods or services being undertaken or proposed to be undertaken by the applicant within the categories set out in Section 97(2); questions concerning activities of a third party or applicability of precedents to another person's facts are outside the statutory scope and warrant rejection of the application under Section 98(2).

Issues: Whether the Advance Ruling application filed by the applicant should be disposed of following the applicant's request to withdraw the application.

Analysis: The applicant submitted a written request dated 14.11.2025 stating that they have decided to withdraw the Application for Advance Ruling and are not inclined to pursue the matter. The Authority recorded the withdrawal and considered the request for withdrawal without adjudicating the substantive questions raised in the application.

Conclusion: The Advance Ruling application is disposed of as withdrawn at the request of the applicant.

Issues: (i) Whether the subject property qualified as a residential dwelling; (ii) Whether exemption under Entry 13 of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 was available when the residential dwelling was leased to an aggregator which further sub-let it for hostel accommodation.

Issue (i): Whether the subject property qualified as a residential dwelling.

Analysis: The expression "residential dwelling" was not defined in the GST regime, so its meaning had to be gathered from common parlance and the accepted understanding of residential accommodation. The property was shown in revenue records as residential in nature, and long-term accommodation for students and working women was treated as use for residence rather than as temporary lodging akin to a hotel or guest house.

Conclusion: The subject property was held to be a residential dwelling.

Issue (ii): Whether exemption under Entry 13 of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 was available when the residential dwelling was leased to an aggregator which further sub-let it for hostel accommodation.

Analysis: Entry 13 granted exemption to services by way of renting of residential dwelling for use as residence. The provision was held to be activity-specific and not person-specific. The condition was satisfied where the property was taken for residential use, and the notification did not add a further requirement that the immediate lessee must itself occupy the premises as a residence. A narrow construction would defeat the object of the exemption, which was to keep residential use outside the GST burden.

Conclusion: The exemption under Entry 13 was held to be available, and GST was not payable on the rent for the relevant period.

Final Conclusion: The appeals were rejected, and the High Court's view granting exemption was sustained.

Ratio Decidendi: Where a notification exempts renting of a residential dwelling for use as residence, the exemption turns on the character and use of the property and is not lost merely because the immediate lessee is an intermediary that sub-lets the premises for residential occupation.

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether leasing of a building, classified and described in the lease deed as a "commercial building", by the applicant to an unregistered company for running long-term residential accommodation for students and working professionals, qualifies as exempt "services by way of renting of residential dwelling for use as residence" under Entry 12 of Notification No. 12/2017-Central Tax (Rate) and the corresponding State notification.

1.2 If the above exemption is inapplicable, how the service supplied by the applicant is to be classified for GST purposes, what rate of tax applies, and on whom the liability to pay GST falls.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Applicability of exemption under Entry 12 of Notification No. 12/2017-CT(R)

Legal framework discussed

2.1 The Court examined Entry 12 of Notification No. 12/2017-Central Tax (Rate), as amended from time to time, particularly:

(a) Pre-18.07.2022: "Services by way of renting of residential dwelling for use as residence".

(b) From 18.07.2022: "Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person".

(c) From 01.01.2023: same entry with Explanation 1 regarding renting by a proprietor in personal capacity.

(d) From 15.07.2024: Entry 12 confined to Heading 9972 (renting of immovable property), with Explanation 1 (proprietor using for own residence) and Explanation 2 excluding "accommodation services for students in student residences" and "accommodation services provided by Hostels, Camps, Paying Guest accommodations and the like"; new Entry 12A for "accommodation services" under Heading 9963.

Interpretation and reasoning

2.2 The Court accepted that there are two distinct supplies:

(i) Renting of immovable property by the applicant to the lessee, classifiable under Heading 9972;

(ii) Accommodation services by the lessee to students/working professionals, classifiable under Heading 9963.

2.3 The Court agreed with the applicant on four of the conditions enumerated by the applicant but disagreed on the second and third conditions, namely:

(a) Whether the property rented is a "residential dwelling"; and

(b) Whether such dwelling is rented "for use as residence".

2.4 On the nature of the property, the Court relied on the language of the draft lease agreement, which describes the subject premises as a "Commercial Building" and proceeds on the footing that it is a commercial property, registered and held as such. On this basis, the Court held that the premises is commercial, not residential, and therefore the ratio of authorities dealing with residential premises is not directly applicable.

2.5 The Court distinguished the Delhi High Court decision interpreting "residential accommodation" under the Delhi Rent Control law, noting that in that case the premises were residential and being partly used as office; whereas in the present case the premises are a "commercial building" ab initio, so the reasoning in that judgment does not assist the applicant.

2.6 The Court further examined the Karnataka High Court decision in Taghar Vasudeva Ambrish, noting two aspects:

(a) The accommodation used there as hostel for students/working women was classified as "residential" in the relevant Master Plan, unlike the present case where the premises are classified and described as commercial; and

(b) A Special Leave Petition has been filed against that judgment and leave has been granted by the Supreme Court, placing the High Court judgment "in jeopardy" and preventing it from attaining finality as a binding precedent, in line with the principles laid down in Kunhayammed and West Coast Paper Mills.

2.7 The Madras High Court decision in Thai Mookambikaa Ladies Hostel was also held distinguishable, as in that case the petitioners themselves were directly providing residential hostel accommodation and claiming exemption, whereas here the applicant is only leasing a commercial building to another entity that provides accommodation. Additionally, that judgment relied on Taghar Vasudeva Ambrish, whose precedential value is already uncertain due to the pending appeal, and a writ appeal has also been filed against the Madras High Court judgment.

2.8 The Court considered the evolution of Entry 12 and held that the subsequent amendments are indicative of legislative intent. By inserting the phrase "except where the residential dwelling is rented to a registered person" and later the explanations limiting exemption to personal residential use (in the case of proprietors) and carving out accommodation/hostel/PG services separately under Heading 9963, the Government's intent is to restrict the exemption to genuine residential use in personal capacity and not to premises used commercially, even if ultimately occupied for residence by third parties.

2.9 Applying this intent to the facts, the Court held that the lessee is not using the premises as its own residence but for a commercial activity of providing residential accommodation (with possible ancillary services such as meals, laundry, wi-fi etc.) to students and working professionals for consideration. The use of the property is therefore commercial in nature and not "for use as residence" in the sense contemplated by the exemption.

Conclusions on Issue 1

2.10 The premises leased by the applicant is a commercial building and not a "residential dwelling" in the sense required by Entry 12.

2.11 The lessee does not use the premises as its own residence but for a commercial business of providing accommodation to others; the exemption is intended only for use as personal residence and not for such commercial exploitation.

2.12 Authorities relied upon by the applicant, including Taghar Vasudeva Ambrish and Thai Mookambikaa Ladies Hostel, are factually distinguishable and/or under challenge and do not govern the present case.

2.13 The applicant's supply does not qualify for exemption under Entry 12 of Notification No. 12/2017-Central Tax (Rate) or the corresponding State notification.

Issue 2 - Classification, rate and liability to pay GST on the applicant's supply

Legal framework discussed

2.14 The Court referred to Heading 9972 (Real estate services) and specifically SAC 997211 (rental or leasing services involving own or leased residential property).

2.15 The Court examined Notification No. 11/2017-Central Tax (Rate) prescribing GST rates on services, and particularly Entry 16 under Heading 9972:

(i) Lease of land by Government, etc. - Nil;

(ii) Certain composite construction-related land leases - Nil; and

(iii) "Real estate services other than (i) and (ii) above" - taxed at 9% CGST (18% total, including SGST).

Interpretation and reasoning

2.16 The Court accepted the applicant's own characterization that the service provided to the lessee is "renting of immovable property" falling under Heading 9972.

2.17 Since the applicant is not covered by sub-entries (i) or (ii) of Entry 16, the rental service supplied falls under residual sub-entry (iii) - "Real estate services other than (i) and (ii) above".

2.18 There is no reverse charge mechanism notified for this transaction; therefore, as a registered supplier of the renting service, the applicant is liable to discharge GST under the forward charge mechanism.

Conclusions on Issue 2

2.19 The renting service supplied by the applicant to the lessee is classifiable under Heading 9972 as "real estate services other than (i) and (ii) above" in Entry 16 of Notification No. 11/2017-Central Tax (Rate).

2.20 The supply attracts GST at 18% (9% CGST + 9% SGST), as applicable from time to time.

2.21 The liability to pay GST on the said renting service rests on the applicant (landlord) under the forward charge mechanism.

Issues: (i) Whether hostel premises used by working men and women as sleeping accommodation are to be treated as commercial premises for levy of property tax, water tax, water charges and electricity charges by applying the service provider's perspective; (ii) Whether the writ petitions were maintainable despite the alternate statutory appeal under Section 100 of the Tamil Nadu Urban Local Bodies Act, 1998, in view of the alleged violation of principles of natural justice.

Issue (i): Whether hostel premises used by working men and women as sleeping accommodation are to be treated as commercial premises for levy of property tax, water tax, water charges and electricity charges by applying the service provider's perspective.

Analysis: The controlling factor was held to be the actual use of the premises by the occupants, not the business character of the owner's activity. The inmates of the hostels used the rooms as residence after work, for sleeping, eating and other daily needs, and the premises were equipped as dwelling accommodation. The definitions of "residence" in the municipal enactments were read in a broad and common-sense manner, and the Court treated a hostel room used as a sleeping apartment as residential in character. Regulation 4(ii) of the water board regulations, which refers to private hostels as commercial premises, was held applicable only where the hostel is in fact used commercially; where the occupants use it as residence, Regulation 7 governs. The Court also relied on the principle that the tariff question must be examined from the recipient's end-use and not from the perspective of the service provider.

Conclusion: The hostel premises were held to be residential premises and not commercial premises, and the commercial tariff was held inapplicable.

Issue (ii): Whether the writ petitions were maintainable despite the alternate statutory appeal under Section 100 of the Tamil Nadu Urban Local Bodies Act, 1998, in view of the alleged violation of principles of natural justice.

Analysis: The Court held that the dispute involved a pure legal issue as to the correct classification of the premises, which could be examined under Article 226 of the Constitution of India. It further found that no material was produced to show prior notice or intimation before conversion of the tariff from residential to commercial classification. In the absence of such prior communication, the impugned demand notices were found to have been issued without affording opportunity to the petitioners. The availability of an appeal on factual questions did not bar writ jurisdiction where the challenge raised a legal issue and a breach of natural justice.

Conclusion: The writ petitions were held maintainable and the demand notices were held to be vitiated by violation of natural justice.

Final Conclusion: The impugned notices were quashed and the respondents were directed to treat the premises as residential units for levy of the relevant taxes and charges.

Ratio Decidendi: For taxation based on use of premises, the decisive test is the actual residential or commercial end-use by the occupants, and not the owner's characterisation of the activity; where tariff conversion is made without prior notice, the resulting demand is vitiated for breach of natural justice.

1. ISSUES PRESENTED AND CONSIDERED

(1) Whether rent received for leasing a residential premises to an educational foundation for accommodation of students, teachers and staff is covered by the exemption for "services by way of renting of residential dwelling for use as a residence" under Entry 13 of Notification No. 9/2017, and therefore not exigible to GST.

(2) Whether, in light of the above, the appellate order rejecting the refund claim and the related endorsement are liable to be set aside and the refund application reconsidered.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Applicability of GST exemption for renting of residential dwelling used as residence

Legal framework (as discussed in the judgment)

(a) Entry 13 of Notification No. 9/2017 dated 28.06.2017 exempts "services by way of renting of residential dwelling for use as residence".

(b) The Court relies on and reproduces in detail the decision of the Division Bench in Taghar Vasudeva Ambrish v. Appellate Authority for Advance Ruling, Karnataka, which considered the same Entry 13 and the expression "services by way of renting of residential dwelling for use as residence".

(c) The Division Bench, after examining statutory interpretation principles for exemption notifications and the meaning of "residential dwelling", held that leasing of residential premises used as hostels by students and working professionals for long-term accommodation is covered by Entry 13 and is exempt from GST.

Interpretation and reasoning

(d) The Court notes that the petitioner's premises were leased to an educational foundation for accommodation of students, teachers and staff; the Gram Panchayat had certified the property as a residential dwelling, and the second respondent's initial audit report itself had treated the rent as derived from a residential premises exempt from GST.

(e) The Court explicitly applies the ratio of the Division Bench in Taghar Vasudeva Ambrish, observing that the Division Bench has already concluded that rent received by leasing out residential premises for the purpose of accommodation of students, staff and teachers is not exigible to GST under Entry 13.

(f) The Court does not undertake a fresh interpretative exercise, but treats the Division Bench decision as binding and directly applicable to the facts, which are materially similar, namely renting of a residential dwelling used as residential accommodation for students, staff and teachers.

Conclusions

(g) The rent received by the petitioner from leasing the residential premises to the foundation for accommodation of students, teachers and staff is not exigible to GST, being covered by the exemption in Entry 13 of Notification No. 9/2017.

(h) The contrary view reflected in the revised audit report and subsequent orders rejecting exemption/refund is inconsistent with the binding Division Bench precedent.

Issue (2): Validity of refund rejection and appellate order; direction to reconsider refund

Interpretation and reasoning

(i) The petitioner had paid GST on the rent "under protest" and sought refund on the basis that the services were exempt. The initial audit report supported this position, but a revised audit report and subsequent orders rejected the exemption and the refund, leading to the impugned endorsement and appellate order.

(j) Since, applying Taghar Vasudeva Ambrish, the underlying rental service is not taxable, the appellate order dated 10.01.2024, which rejected the refund claim, is premised on an incorrect view of the law.

(k) The Court holds that this legal error vitiates the impugned appellate order, and that the refund claim must be reconsidered afresh in accordance with the principles laid down by the Division Bench.

Conclusions

(l) The impugned appellate order dated 10.01.2024 rejecting the petitioner's appeal for refund is set aside.

(m) The respondents are directed to reconsider the refund application dated 26.09.2022 and to pass appropriate orders within six weeks from receipt of the Court's order, bearing in mind and applying the principles laid down in Taghar Vasudeva Ambrish.

Issues: Whether the respondent was entitled to exemption under the relevant central excise notifications on the sale of yarn to apex handloom co-operative societies, and whether the demand of duty, interest and penalty could be sustained.

Analysis: The notification granted exemption to specified goods purchased by a registered apex handloom co-operative society, National Handloom Development Corporation, or State Government Handloom Development Corporation, subject to payment by cheque from the purchaser's own bank account and production at clearance of a certificate that the yarn was going to be used only on handlooms. On the evidence, the yarn was purchased by the two apex bodies, payments were made by account payee cheques from their own accounts, and certificates covering the intended use were produced. The inference that the goods were really sold to traders was not supported by material on record. The conditions in the exemption notification did not require proof of actual end use by the ultimate user, and the authorities could not add a condition not found in the notification. In fiscal interpretation, exemption clauses are construed strictly, but once the assessee falls within the language of the notification, the benefit cannot be denied by conjecture or intendment.

Conclusion: The respondent satisfied the conditions of the exemption notifications and was entitled to the benefit of exemption. The demand of duty, interest and penalty was unsustainable.

ISSUES:

• Whether services by way of providing hostel accommodation qualify for exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 and identical notifications under TNGST Act and Entry 13 of Exemption Notification No. 09/2017-IT (Rate) dated 28.06.2017.
• Whether the applicant is required to obtain GST registration given the nature of services provided and turnover thresholds.
• Classification of the supply of hostel accommodation services under the GST tariff headings and applicable rate of tax.
• Whether the incidental supply of in-house food to hostel inmates forms part of a composite supply with hostel accommodation and the applicable tax rate.
• Admissibility and scope of the fifth question raised by the applicant under Section 97(2) of the CGST/TNGST Act.

RULINGS / HOLDINGS:

• Hostel accommodation services provided do not qualify as "services by way of renting of residential dwelling for use as residence" and hence are not eligible for exemption under the relevant exemption notifications.
• The applicant is required to obtain GST registration if their aggregate turnover in a financial year exceeds twenty lakh rupees, as the supply constitutes a taxable supply under Section 7(1)(a) of the CGST Act, 2017.
• The supply of hostel accommodation services falls under Tariff heading 9963 (Accommodation, food and beverage services) and is taxable at 9% CGST plus 9% SGST under Sl. No. 7(vi) of Notification No. 11/2017, as amended.
• The supply of in-house food to inmates is a composite supply with hostel accommodation as the principal supply; thus, the entire composite supply is taxable at the rate applicable to the principal supply, i.e., 18% GST.
• No ruling is issued on the fifth question as it does not fall within the scope of Section 97(2) of the CGST/TNGST Act.

RATIONALE:

• The legal framework applied includes the Central Goods and Services Tax Act, 2017, Tamil Nadu Goods and Services Tax Act, 2017, relevant exemption notifications (No. 12/2017-CT (Rate), No. 09/2017-IT (Rate), and No. 11/2017 Central Tax (Rate)), and applicable GST rules.
• The term "residential dwelling" is not defined under GST law but is interpreted based on the erstwhile Service Tax Education Guide and common trade parlance to exclude hotels, hostels, inns, guest houses, and similar commercial accommodations meant for temporary stay.
• Hostel accommodation involves letting out rooms on a per bed basis with ancillary services such as food, housekeeping, and security, which distinguishes it from renting a residential dwelling to a family or individual for use as residence.
• Licensing and regulatory requirements applicable to hostels under various Tamil Nadu enactments indicate that hostels are treated as commercial or public buildings, not residential dwellings.
• The exemption notifications are to be interpreted strictly, with the burden on the applicant to prove eligibility; ambiguity in exemption provisions must be resolved in favor of revenue as per Supreme Court precedent.
• The composite supply concept under Section 2(30) and Section 8 of the CGST Act applies to bundled services where one service is principal; here, hostel accommodation is principal, and incidental food supply is ancillary, attracting the principal supply's tax rate.
• The decision distinguishes the present facts from contrary Karnataka High Court rulings, noting pending Supreme Court review, and rejects reliance on unrelated judicial precedents not addressing GST law or the specific exemption context.

ISSUES:

• Whether services by way of providing hostel accommodation qualify as "services by way of renting of residential dwelling for use as residence" and are eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding notifications under TNGST Act and Integrated Tax.
• Whether the applicant providing hostel accommodation is required to obtain GST registration under Section 22 of the CGST Act, 2017.
• Classification of the supply of hostel accommodation services under the GST tariff and applicable rate of tax.
• Whether the incidental supply of in-house food to hostel inmates forms a composite supply with the accommodation services and the applicable tax rate on such composite supply.
• Admissibility of the fifth question raised by the applicant under Section 97(2) of the CGST Act, 2017.

RULINGS / HOLDINGS:

• On Issue 1: The services by way of providing hostel accommodation do not qualify as "services by way of renting of residential dwelling for use as residence" and hence are not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding notifications under the TNGST Act and Integrated Tax.
• On Issue 2: The applicant is required to get themselves registered under the GST Acts if their aggregate turnover in a financial year exceeds twenty lakh rupees.
• On Issue 3: The supply of hostel accommodation services falls under Tariff heading 9963 (Accommodation, food and beverage services) and is taxable at 9% CGST + 9% SGST under Sl.No. 7(vi) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended.
• On Issue 4: The supply of in-house food to inmates is a composite supply with hostel accommodation as the principal supply, and the composite supply is taxable at the rate applicable to the principal supply, i.e., 18%.
• On Issue 5: No ruling is issued as the question does not fall within the scope of Section 97(2) of the CGST Act, 2017.

RATIONALE:

• The legal framework applied includes Sections 7, 22, 97, 100, 103, and 104 of the CGST Act, 2017, relevant exemption notifications (notably Notification No. 12/2017-Central Tax (Rate) and Notification No. 11/2017-Central Tax (Rate) as amended), and definitions under GST law including "composite supply" under Section 2(30) of the CGST Act.
• The term "residential dwelling" is not defined under the CGST Act or exemption notifications but was interpreted under erstwhile service tax law and in normal trade parlance as residential accommodation excluding hotels, motels, inns, guest houses, and similar places meant for temporary stay.
• The court emphasized that exemption notifications are to be interpreted strictly and the burden lies on the applicant to prove applicability; ambiguity is resolved in favour of revenue.
• The applicant's hostel accommodation was found to be commercial in nature and akin to hotel accommodation rather than residential dwelling, supported by regulatory licensing requirements applicable to hostels but not to residential dwellings.
• The absence of a landlord-tenant relationship typical of residential renting and the provision of ancillary services such as food, housekeeping, and security further distinguishes the hostel accommodation from residential dwelling rentals.
• Precedents and case law cited by the applicant were found inapplicable as they dealt with different facts or legal contexts, and some relevant decisions are pending before the Supreme Court.
• The classification of hostel accommodation under tariff heading 9963 and the applicable GST rate of 9% CGST + 9% SGST follows from the amended Notification No. 11/2017 and clarifies that hostel services are distinct from hotel accommodation which attracts different rates.
• The supply of food and other ancillary services bundled with accommodation constitutes a composite supply with accommodation as principal supply, attracting the tax rate applicable to the principal supply as per Section 8 of the CGST Act.
• The ruling aligns with the principle that the purpose and objective of exemption notifications is to avoid taxing residential properties rented to families or individuals and does not extend to commercial or public buildings used for accommodation services.

1. ISSUES PRESENTED and CONSIDERED

The legal questions considered in this judgment are:

• Whether the hostel accommodation provided by the Applicant qualifies for exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 and the identical Notification under the TNGST Act, 2017, and Entry 13 of Exemption Notification No.09/2017-IT (Rate) dated 28.06.2017, as amended.
• Whether the Applicant is required to register under GST if their aggregate turnover exceeds twenty lakh rupees in a financial year.
• What is the applicable tariff heading and rate of tax for the supply of hostel accommodation servicesRs.
• Whether the supply of in-house food to hostel inmates is exempt as a composite supply if hostel accommodation is deemed exempt.
• Whether any ruling can be issued on a question not falling under the scope of Section 97(2) of the GST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Exemption Eligibility for Hostel Accommodation

• Relevant Legal Framework and Precedents: The exemption under Entry 12 of Notification No. 12/2017-CT (Rate) pertains to services by way of renting of residential dwelling for use as residence. The term "residential dwelling" is not defined under the CGST Act, but is interpreted in normal trade parlance.
• Court's Interpretation and Reasoning: The court analyzed whether the hostel accommodation qualifies as a "residential dwelling" for use as residence. It concluded that hostels, which provide accommodation with ancillary services, do not fit the definition of "residential dwelling" as they are more akin to commercial establishments.
• Key Evidence and Findings: The Applicant provides hostel services with additional amenities such as food and housekeeping, which are not typical of a residential dwelling. Licenses and certificates obtained by the Applicant classify the hostel as a public building, not a residential dwelling.
• Application of Law to Facts: The court found that the Applicant's hostel accommodation does not qualify for exemption as it does not meet the criteria of "residential dwelling for use as residence."
• Treatment of Competing Arguments: The Applicant's reliance on the Karnataka High Court decision was noted, but the court highlighted that a Special Leave Petition is pending before the Supreme Court. The court also dismissed the Applicant's reliance on zoning regulations and other case laws as not applicable.
• Conclusions: The services provided by the Applicant are not eligible for exemption under the specified notifications.

Issue 2: Requirement for GST Registration

• Relevant Legal Framework: Section 22 of the CGST Act mandates registration for suppliers whose aggregate turnover exceeds twenty lakh rupees in a financial year.
• Court's Interpretation and Reasoning: The court determined that the Applicant's services constitute a "supply" under Section 7(1)(a) of the CGST Act, requiring registration if the turnover threshold is exceeded.
• Conclusions: The Applicant must register under GST if their turnover exceeds the specified threshold.

Issue 3: Applicable Tariff Heading and Rate of Tax

• Relevant Legal Framework: Notification No. 11/2017, Central Tax (Rate), specifies tax rates for various services, including accommodation services under Heading 9963.
• Court's Interpretation and Reasoning: Hostel services are classified under Heading 9963 and are taxable at 18% (9% CGST + 9% SGST) as per the notification.
• Conclusions: The supply of hostel accommodation services is taxable at 18% under the specified tariff heading.

Issue 4: Taxability of In-House Food Supply

• Relevant Legal Framework: Section 2(30) of the GST Act defines "composite supply" and Section 8 determines the tax rate based on the principal supply.
• Court's Interpretation and Reasoning: The court found that the supply of in-house food is part of a composite supply with hostel accommodation as the principal supply, taxable at the same rate.
• Conclusions: The composite supply, including food services, is taxable at 18%.

Issue 5: Scope of Ruling

• Court's Interpretation and Reasoning: The court declined to issue a ruling on the fifth question as it does not fall under Section 97(2) of the GST Act.
• Conclusions: No ruling was issued for the fifth question.

3. SIGNIFICANT HOLDINGS

• Core Principles Established: Hostel accommodation does not qualify as a "residential dwelling" for GST exemption purposes. The supply of hostel services is a taxable supply requiring registration if turnover exceeds the threshold.
• Final Determinations on Each Issue:
• Hostel services are not exempt under the specified notifications.
• The Applicant must register under GST if the turnover exceeds twenty lakh rupees.
• Hostel services are taxable at 18% under Heading 9963.
• Supply of in-house food is part of a composite supply taxable at 18%.
• No ruling on the fifth question as it falls outside the scope of the Act.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment addresses the following core issues:

• Whether the hostel accommodation provided by the Applicant qualifies for exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) and similar notifications under the TNGST Act, 2017.
• Whether the Applicant is required to register under the GST Act if their aggregate turnover exceeds twenty lakh rupees.
• The appropriate tariff heading and tax rate applicable to the supply of hostel accommodation services by the Applicant.
• Whether the supply of in-house food to hostel inmates is exempt as part of a composite supply.
• Additional questions raised by the Applicant that do not fall under the scope of Section 97(2) of the GST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Exemption Eligibility for Hostel Accommodation

• Relevant Legal Framework and Precedents: The exemption under Entry 12 of Notification No. 12/2017-CT (Rate) applies to "services by way of renting of residential dwelling for use as residence." The term "residential dwelling" is not defined under the CGST Act but is interpreted in trade parlance as excluding temporary accommodations like hotels or hostels.
• Court's Interpretation and Reasoning: The court determined that the hostel accommodation provided by the Applicant does not qualify as a "residential dwelling" for use as a residence. Hostels, by nature, offer temporary lodging and are considered commercial establishments.
• Key Evidence and Findings: The Applicant's hostel provides accommodation to students and working women, charges are based on per bed, and additional services like food and housekeeping are included. Licenses and certificates classify the hostel as a commercial entity.
• Application of Law to Facts: The court found that the hostel's operation is akin to a business providing accommodation services, not a residential dwelling for use as a residence.
• Treatment of Competing Arguments: The Applicant's reliance on the Karnataka High Court's decision was noted, but the court emphasized that the decision is under appeal and not binding. The court also rejected the Applicant's reliance on zoning regulations and other legal precedents as not applicable to the GST context.
• Conclusions: The hostel accommodation does not qualify for the exemption under the specified notifications.

Issue 2: Requirement for GST Registration

• Relevant Legal Framework: Section 22 of the CGST Act mandates registration for suppliers whose aggregate turnover exceeds twenty lakh rupees.
• Court's Interpretation and Reasoning: The court held that the Applicant must register under the GST Act if their turnover exceeds the threshold, as the hostel operation is considered a business activity.
• Conclusions: The Applicant is required to register for GST if the turnover criterion is met.

Issue 3: Tariff Heading and Tax Rate for Hostel Services

• Relevant Legal Framework: Notification No. 11/2017, Central Tax (Rate), specifies tax rates for accommodation services under Heading 9963.
• Court's Interpretation and Reasoning: The court classified the hostel services under Heading 9963, taxable at 9% CGST and 9% SGST.
• Conclusions: The applicable tax rate for the hostel services is 18% (9% CGST + 9% SGST).

Issue 4: Taxability of In-House Food Supply

• Relevant Legal Framework: Section 2(30) of the GST Act defines "composite supply" as a supply consisting of two or more goods or services naturally bundled.
• Court's Interpretation and Reasoning: The court determined that the supply of in-house food is part of a composite supply with hostel accommodation as the principal supply, taxable at 18%.
• Conclusions: The composite supply, including food, is taxable at the rate applicable to hostel accommodation services.

Issue 5: Additional Questions

• Conclusions: No ruling was issued for questions not within the scope of Section 97(2) of the GST Act.

3. SIGNIFICANT HOLDINGS

• Core Principles Established: The judgment clarifies that hostel accommodations do not qualify as "residential dwellings" for GST exemption purposes. The judgment also emphasizes strict interpretation of exemption notifications.
• Final Determinations on Each Issue:
  
  • The hostel accommodation is not exempt under Entry 12 of the relevant notifications.
  • The Applicant must register for GST if turnover exceeds twenty lakh rupees.
  • The hostel services are taxable at 18% under Heading 9963.
  • The supply of in-house food is part of a composite supply, taxable at 18%.
  • No ruling on questions outside Section 97(2) of the GST Act.
  
  

Verbatim Quotes of Crucial Legal Reasoning:

"Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification."

"The purpose and objective of the notification is nothing but to avoid taxing residential properties taken on rent by family or individuals and the benefit of exemption is not extended to the premises which do not qualify as residential dwelling for use as residence."

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the hostel accommodation extended by the Applicant qualifies for exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 and under the identical Notification under the TNGST Act, 2017.
• Whether the Applicant is required to register under the GST Enactments if their aggregate turnover exceeds twenty lakh rupees.
• The applicable tariff heading and rate of tax for the supply of hostel accommodation services.
• Whether the incidental activity of supplying in-house food to hostel inmates is exempt as part of a composite supply.
• Other questions raised by the Applicant that do not fall under the scope of Section 97(2) of the GST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Exemption Eligibility under Entry 12

• Relevant Legal Framework and Precedents: Entry 12 of Exemption Notification No. 12/2017-CT (Rate) exempts services by way of renting a residential dwelling for use as a residence. The term "residential dwelling" is not specifically defined in the CGST Act.
• Court's Interpretation and Reasoning: The court observed that a "residential dwelling" typically refers to a place used as a home, which does not include hostels. Hostels provide temporary lodging and are more akin to commercial accommodations.
• Key Evidence and Findings: The Applicant's hostel is registered under various regulations applicable to commercial establishments, not residential dwellings.
• Application of Law to Facts: The Applicant's hostel does not qualify as a residential dwelling for use as a residence, thus not eligible for the exemption.
• Treatment of Competing Arguments: The Applicant relied on precedents and zoning regulations, which the court found inapplicable as they do not determine the nature of the property for GST purposes.
• Conclusions: The services provided by the Applicant are not eligible for exemption under the specified entry.

Issue 2: Requirement for GST Registration

• Relevant Legal Framework: Section 22 of the CGST Act mandates registration for suppliers with an aggregate turnover exceeding twenty lakh rupees.
• Court's Interpretation and Reasoning: The hostel services constitute a business activity, and thus, the Applicant must register if the turnover threshold is exceeded.
• Conclusions: The Applicant is required to register under GST if their turnover exceeds the specified limit.

Issue 3: Tariff Heading and Tax Rate

• Relevant Legal Framework: Notification No. 11/2017, Central Tax (Rate), as amended, specifies tax rates for different services.
• Court's Interpretation and Reasoning: Hostel services fall under Tariff heading 9963 and are taxable at 9% CGST + 9% SGST.
• Conclusions: The applicable tax rate for the Applicant's services is 18% (9% CGST + 9% SGST).

Issue 4: Composite Supply of In-house Food

• Relevant Legal Framework: Section 2(30) of the GST Act defines composite supply.
• Court's Interpretation and Reasoning: The supply of food is part of a composite supply, with hostel accommodation as the principal supply.
• Conclusions: The tax rate for the composite supply is 18%, corresponding to the principal supply of hostel accommodation.

Issue 5: Scope of Section 97(2)

• Court's Interpretation and Reasoning: Certain questions raised by the Applicant do not fall within the scope of Section 97(2) and thus no ruling is issued.

3. SIGNIFICANT HOLDINGS

• Exemption Ineligibility: "The services by way of providing hostel accommodation supplied by the Applicant are not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017."
• Registration Requirement: The Applicant must register under GST if their turnover exceeds twenty lakh rupees.
• Tax Rate Determination: "The supply of services by way of providing hostel accommodation falls under Tariff heading 9963 and is taxable @ 9% CGST + 9% SGST."
• Composite Supply Tax Rate: The composite supply of hostel accommodation and food is taxed at 18%.
• No Ruling on Certain Questions: No ruling is issued for questions outside the scope of Section 97(2).

ISSUES PRESENTED AND CONSIDERED

1. Whether services by way of providing hostel accommodation to students and working women qualify as "services by way of renting of residential dwelling for use as residence" and are therefore exempt under the relevant exemption notifications.

2. Whether the applicant is liable to register under the GST enactments if aggregate turnover exceeds the prescribed threshold, given the taxability or exemption status of the hostel services.

3. The tariff heading and applicable GST rate for the supply of hostel accommodation services.

4. Whether in-house supply of food to hostel inmates is part of an exempt composite supply (if accommodation were exempt) or otherwise how the composite supply is to be taxed.

5. Admissibility of a particular question raised by the applicant under Section 97(2) of the GST Act (question found outside scope).

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Whether hostel accommodation qualifies as "renting of residential dwelling for use as residence" (legal framework)

Legal framework: Exemption entries cover "services by way of renting of residential dwelling for use as residence" under specified headings; the term "residential dwelling" is not defined in the GST statute or notification. Interpretative principles require strict construction of exemption notifications; burden lies on claimant to demonstrate applicability.

Precedent treatment: CBIC guidance under erstwhile service tax interpreted "residential dwelling" to exclude hotels, motels, inns, guest houses, campsites and similar temporary-stay places. Applicant relied on High Court decision treating hostels as residential dwellings; that decision was noted to be subject to SLP pending before the Supreme Court. Various judicial authorities on "residence" and "dwelling" were cited by applicant but found inapplicable to the exemption context.

Interpretation and reasoning: The Court examined factual features of hostels: per-bed charges, subdivision of buildings, consolidated charges including ancillary services (food, housekeeping), licences and regulatory regime applicable uniquely to hostels/public buildings, absence of landlord-tenant maintenance obligations typical of residential lettings, and commercial character akin to hotels/paying-guest accommodation. It distinguished between "accommodation" (temporary lodging) and "residence" (home/abode for extended/permanent living with family). Zoning permissibility did not determine tax character. Exemption purpose was held to be aimed at ordinary residential lettings to families/individuals, not commercial hostels.

Ratio vs. Obiter: Ratio - hostels providing bundled accommodation and ancillary services for consideration do not meet the twin conditions ("residential dwelling" and "use as residence") required for the exemption and therefore are not covered. Observations on inapplicability of cited case law and on infirmity of relying solely on zoning or licences are supporting ratio.

Conclusion: Hostel accommodation supplied by the applicant is not eligible for exemption under the cited entries for "renting of residential dwelling for use as residence."

Issue 2 - Requirement to register under GST (legal framework)

Legal framework: Section 22 requires registration by suppliers of taxable supplies if aggregate turnover exceeds statutory threshold. Supply constitutes "supply" under Section 7 when in course or furtherance of business.

Precedent treatment: Not invoked; applied statutory criteria.

Interpretation and reasoning: Having held the hostel services taxable (not exempt), the supply is a business supply in furtherance of business. Therefore, if aggregate turnover in a financial year exceeds the specified threshold, registration obligation arises.

Ratio vs. Obiter: Ratio - taxable supplier must register when threshold exceeded.

Conclusion: Applicant required to obtain GST registration in the State if aggregate turnover exceeds the threshold specified by law.

Issue 3 - Tariff heading and applicable GST rate for hostel accommodation (legal framework)

Legal framework: Notification entries classify accommodation, food and beverage services under Heading 9963 with specified sub-entries and rates; different entries apply to hotel accommodation (various rates) and to "accommodation, food and beverage services other than" enumerated items (tax rate specified).

Precedent treatment: Noted policy/notification changes which expanded hotel accommodation definition in 2019 and subsequent rate amendments; Court treated hostel services distinct from hotel services for rate determination.

Interpretation and reasoning: Hostels differ from hotels by intended duration, facilities and staffing; they are basic accommodation for longer periods. Therefore hostel accommodation is not to be equated with hotel accommodation for rate purposes. The supply falls under the residual entry for accommodation, food and beverage services (other than specified sub-items) and is taxable at the rate assigned to that residual category.

Ratio vs. Obiter: Ratio - hostel accommodation is classifiable under Heading 9963 as "accommodation, food and beverage services other than (i)-(v)" and taxable at the rate prescribed for that entry.

Conclusion: Supply of hostel accommodation is classifiable under Heading 9963 and taxable at the rate applicable to the residual accommodation services entry (9% CGST + 9% SGST as per the notification applied by the Tribunal for the relevant period).

Issue 4 - Tax treatment of in-house food supplied to inmates (composite supply analysis)

Legal framework: Definition of "composite supply" (Section 2(30))-naturally bundled supplies with a principal supply; Section 8 treats tax on composite supply as tax applicable to principal supply.

Precedent treatment: Applied statutory composite supply rules.

Interpretation and reasoning: Applicant provides accommodation together with ancillary services (food, housekeeping) for a single consolidated charge; accommodation is the principal supply and ancillary services are naturally bundled. As accommodation is taxable (not exempt) and the applicant charges consolidated consideration, the tax rate of the principal supply governs the composite supply. The Tribunal applied the principal-supply rule and concluded the composite supply bears the tax rate attributable to the principal supply.

Ratio vs. Obiter: Ratio - where accommodation is principal taxable supply and ancillary food is bundled, composite supply attracts tax rate of principal supply.

Conclusion: In-house food supplied to inmates forms part of a composite supply whose tax rate is the rate applicable to the principal supply (hostel accommodation); accordingly the composite supply is taxable at the principal supply rate determined (treated as taxable @ 18% CGST+SGST in the Tribunal's finding for composite calculation).

Issue 5 - Admissibility under Section 97(2)

Legal framework: Advance ruling admissibility limited by Section 97(2) scope.

Precedent treatment: Application of admissibility provision to the questions presented.

Interpretation and reasoning: The Tribunal considered questions 1-5 and found Questions 1-4 admissible under relevant subsections of Section 97(2); Question 5 did not fall within the scope and therefore no ruling issued.

Ratio vs. Obiter: Ratio - advance ruling power confined to matters enumerated in Section 97(2); questions outside that scope are not entertainable.

Conclusion: No ruling issued on the question that falls outside Section 97(2).