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2026 (6) TMI 641 - CESTAT BANGALORE Service Tax

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Residential dwelling rental exemption applies where premises are ultimately used as residence, supporting refund maintainability.
Renting of premises used as hostel accommodation for students was held to fall within the exemption for renting of a residential dwelling for use as residence, because the exemption is activity-specific and turns on the ultimate residential use rather than on whether the lessee itself occupies the premises as its own residence. On that construction, the rental income was not liable to service tax. The refund claim was also maintainable, and the denial of refund was set aside with consequential relief.

Scope of show cause notice - Renting of residential dwelling for use as residence - Refund of service tax paid on exempt renting service - prescribed period of limitation - Entitlement to exemption from service tax as per Section 66D(m) and in terms of Notification No.33/2012 dated 20.06.2012 - building hired for running hostel and not for residential purpose. Scope of show cause notice - Refund claim vis-a-vis unchallenged assessment - The Revenue could not sustain rejection of the refund claim on the ground that the self-assessment had not been separately challenged, when that was not the basis of the show-cause notice or the impugned orders. - HELD THAT: - The Tribunal found that the show-cause notice and the orders below had proceeded on the footing that the refund claim turned on the assessee's eligibility to exemption under Section 66D(m), and not on any independent bar arising from failure to challenge an assessment. Since the authorities had considered the refund on merits and rejected it only on the view that service tax was payable, the objection sought to be urged by the Revenue at the appellate stage was beyond the scope of the notice and the impugned orders. Applying the principle that the Department cannot travel beyond the show-cause notice, the Tribunal rejected the Revenue's objection founded on finality of assessment. The objection that refund was not maintainable for want of challenge to assessment was rejected as being outside the case set up in the show-cause notice and the impugned orders. Renting of residential dwelling for use as residence - Hostel accommodation for students - Activity specific exemption - Renting of the building to an educational institution for use as a hostel for its students was covered by the expression 'services by way of renting of residential dwelling for use as residence' under Section 66D(m) of the Finance Act, 1994. - HELD THAT: - The Tribunal held that there was no dispute that the premises were rented to the educational institution and were in turn used for residence by students. The sole basis of denial was that use as a hostel was not residential use. Relying on M/s. Taghar Vasudeva Ambrish [2025 (12) TMI 505 - SUPREME COURT], the Tribunal held that the exemption attaches to the activity of renting residential dwelling for ultimate use as residence, and does not depend on whether the lessee itself occupies the premises. Since the wording considered by the Supreme Court was materially similar, that ruling was found squarely applicable. The TRU clarification that residential dwelling means residential accommodation, excluding places meant for temporary stay such as hotel, motel, inn, guest house, camp-site, lodge, house boat or like places, also supported the conclusion. On that reasoning, the rental income from the premises used as student hostel was not chargeable to service tax. The appellant was held not liable to service tax on the rental income, and the refund claim was consequently allowable with consequential relief. Final Conclusion: The Tribunal held that the Revenue could not defend rejection of the refund on a ground not taken in the show-cause notice or the impugned orders. On merits, renting the premises to the educational institution for use as student hostel was held to fall within renting of residential dwelling for use as residence under Section 66D(m), and the appeal was allowed with consequential relief.

2026 (3) TMI 997 - CESTAT CHENNAI Customs

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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.

Exemption scope limited to express description: paddy reapers without binder excluded, but confiscation and penalties quashed for bona fide mistake.
Exemption entitlement is confined to the exact description in the notification: imported paddy reapers lacking the binder attachment do not qualify as "Reaper-cum-Binder" and are not entitled to concessional duty under Notification No. 12/2012-Cus (Sl. No. 399A). Conversely, where goods were correctly described in the Bill of Entry and the claimant advanced a bona fide but mistaken exemption claim under self-assessment, confiscation, redemption fine and penalty under the Customs Act are unsustainable and are quashed. Outcome: denial of exemption upheld; differential duty payable remains; confiscation and penalties set aside.

Eligibility for concessional duty under Notification No. 12/2012-Cus (Sl. No. 399A) - import of agricultural machinery described as “Paddy Reaper Model VS-4 PR” - essential function of reaping paddy crops - confiscation and penalty - Whether the imported goods described as Paddy Reaper without binder are eligible for exemption under Notification No.12/2012-Cus (Sl.No.399A) applicable to Reaper-cum-Binder machines? Strict interpretation of exemption notifications - Imported paddy reapers without binder attachment are not eligible for the benefit of Notification No. 12/2012-Cus., Sl. No. 399A described as "Reaper-cum-Binder". - HELD THAT:- The Tribunal in Commissioner of Customs (Port), Kolkata vs Chirag Corporation – [2020 (2) TMI 1432 - CESTAT KOLKATA], while interpreting the very same Notification No. 12/2012-Cus., Sl. No. 399(A), examined whether the exemption available to “Rotary Tiller/Weeder” could be extended to Power Tillers. The Tribunal, after analysing the scheme of the notification and the distinction between the two types of agricultural machinery, held that the eligibility for exemption must be determined strictly on the basis of the description contained in the notification. The Tribunal examined the wording of the exemption entry and upheld that the expression "Reaper-cum-Binder" denotes a single integrated machine performing both reaping and binding functions. The court applied the principle that where the wording of an exemption notification is clear and unambiguous the benefit cannot be extended beyond its express language, noting that accepting the appellant's contention would render the words "cum-binder" otiose. Reliance was placed upon precedent interpreting the same notification and the settled rule that the claimant bears the burden of proving entitlement to exemption; consequently, paddy reapers lacking the binder attachment do not satisfy the description in the notification. [Paras 8] The imported paddy reapers without binder attachment do not satisfy the description "Reaper-cum-Binder" and are not entitled to the concessional duty under Notification No. 12/2012-Cus., Sl. No. 399A. Confiscation and penalty require misdeclaration or deliberate evasion - HELD THAT: - Section 111(m) applies where the goods do not correspond with the entry in the Bill of Entry; the Tribunal found no discrepancy between the declared goods (paddy reapers) and the goods imported. Citing authority that confiscation and penalty cannot be sustained merely because an exemption claim is later disallowed, the court held that in the absence of deliberate misdescription or intent to evade duty, confiscation and penalty are not warranted. The appellant's claim was treated as a bona fide but mistaken interpretation of the notification made under the self-assessment regime, so the essential ingredient for invoking Section 111(m) and imposing penalty under Section 112(a) is absent. [Paras 9] Confiscation under Section 111(m) and the consequential redemption fine and penalty under Section 112(a) are set aside. Final Conclusion: The appeal is partly allowed: the denial of concessional duty was upheld because the imported machines are not "Reaper-cum-Binder", but the confiscation, redemption fine and penalty are set aside for lack of misdeclaration or deliberate evasion; the goods are liable to assessment at the applicable tariff rate and the differential duty demand stands.

2026 (2) TMI 714 - AUTHORITY FOR ADVANCE RULING, TAMILNADU GST

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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).

Advance Ruling admissibility: only applicant centric supply questions are permissible; third party queries warrant rejection after hearing.
Authority addressed admissibility of advance ruling requests and concluded that questions must concern supplies undertaken or proposed by the applicant within the statutory categories; queries about a tenant's activities or the applicability of precedents to another person's facts fall outside the applicant centric scope and are inadmissible. After providing an opportunity to be heard and noting absence of material altering admissibility, the Authority applied the statutory power to reject applications following examination and hearing and rejected the application accordingly. The ruling emphasises that binding effect of any advance ruling remains limited to the applicant itself.

Advance ruling under Section 95(a) - scope of questions under Section 97(2) - advance ruling binding only on the applicant and concerned officer - admissibility of application - rejection under Section 98(2) - composite exempt supply - Entry 12 exemption for renting of residential dwelling - Entry 12A inserted by Notification No. 4/2024Advance ruling under Section 95(a) - scope of questions under Section 97(2) - admissibility of application - The queries in the applicant's advance ruling application are not admissible as they relate to activities undertaken by the applicant's tenant and not to supplies undertaken or proposed to be undertaken by the applicant. - HELD THAT: - The Authority examined the statutory definition of 'advance ruling' under Section 95(a) and the catalogue of permissible questions under Section 97(2). An advance ruling is available only in respect of supplies of goods or services being undertaken or proposed to be undertaken by the applicant. The principal queries sought a determination whether hostel accommodation provided by the applicant's tenant qualifies as a 'residential dwelling' for exemption purposes for the period 01.07.2017 to 11.07.2024 and whether Entry 12A (inserted by Notification No. 4/2024 with effect from 12.07.2024) would apply. Those queries therefore concern the tenant's activity and do not relate to any supply by the applicant. The question whether incidental supply of in house food constitutes a composite exempt supply is wholly dependent on the primary queries and thus also not admissible. Queries asking whether particular judicial decisions apply to the applicant's facts likewise fall outside the matters enumerated in Section 97(2) and are not admissible. The Authority further noted that an advance ruling is binding only on the applicant and the concerned officer, so precedent rulings in other proceedings cannot render these tenant centric queries admissible. [Paras 6]All queries are prima facie not covered by the definition of 'advance ruling' and are not admissible for consideration.Rejection under Section 98(2) - advance ruling binding only on the applicant and concerned officer - The advance ruling application is rejected under Section 98(2) because the questions presented are not admissible under the advance ruling scheme. - HELD THAT: - Having given the applicant an opportunity of personal hearing and considered the submissions, the Authority concluded that the application did not raise questions maintainable as advance ruling matters. The Authority referred to the statutory provisions governing admission and rejection of applications and observed that because the queries concern the tenant's supplies and fall outside Section 97(2), the application must be rejected. The AR was given an opportunity to supply additional materials but did not furnish any documents that could alter the admissibility conclusion; moreover, even potential precedential material would not enlarge the advance ruling's applicability beyond the applicant. Consequently, the Authority declined to enter into merits and proceeded to reject the application. [Paras 6, 7]Application for Advance Ruling is rejected under Section 98(2) of the CGST Act, 2017.Final Conclusion: The Authority held that the application was not admissible because the questions related to supplies made by the applicant's tenant (and not by the applicant) and therefore rejected the Advance Ruling application under Section 98(2); no merits determination on exemption or composite supply was made.

2026 (2) TMI 579 - AUTHORITY FOR ADVANCE RULING, TAMILNADU GST

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Advance ruling on exempt supply for hostel and residential accommodation services withdrawn; application disposed without merits.
An advance ruling application seeking treatment of hostel and residential accommodation services as exempt was withdrawn by the applicant due to a post filing change of circumstances (the premises will be rented to a tenant not carrying on hostel services). The withdrawal was taken on record and the application was disposed of without examination of merits; no substantive determination on taxability or exemption was made.

2025 (12) TMI 505 - Supreme Court GST

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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.

Residential dwelling exemption under GST applies where property is used for residence, even if leased through an intermediary.
A residential property used for long-term accommodation of students and working women was treated as a residential dwelling under GST, with the meaning drawn from common parlance because the term was not defined in the regime. Exemption under Entry 13 of Notification No. 9/2017-Integrated Tax (Rate) was held to apply to renting of a residential dwelling for use as residence, because the condition depends on the character and use of the property rather than on whether the immediate lessee personally occupies it. The notification was read as activity-specific, so leasing to an aggregator that sub-lets the premises for residential occupation did not defeat the exemption. The result was that GST was not payable on the rent for the relevant period.

Exemption from GST - leasing of residential premises as hostel to students and working professionals - Entry 13 of the Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 - HELD THAT:- The High Court of Bombay in Bandu Ravji Nikam [2002 (9) TMI 897 - BOMBAY HIGH COURT] has explained “residential dwelling” in detail. In this case, a suit for eviction of a tenant was contested by the tenant saying that the landlord was attempting to evict him in order to lease out the premises to a hostel and that hostel accommodation amounted to ‘non residential accommodation’ which was impermissible under Section 25 of Bombay Rent Control Act. The High Court held that by the very nature of the use of students hostel, it is only a residential user as hostel, is a house of residence or lodging for students and that just because the hostel owners charge some amount from the students, such accommodation cannot be treated as commercial or non residential. In common parlance, ‘residential dwelling’ means any building, structure, or part of the building or structure other than offices or factories, that is used or intended to be used as a home, residence, or sleeping place by one person or by two or more persons maintaining a common household, to the exclusion of all others - Thus, any residential accommodation meant for long term stay can be referred to as “residential dwelling”. The materials on record further indicate that as per the Khatha Extract and layout plans and records available with the Bruhat Bangalore Mahanagara Palike, the plot and property is shown as residential in nature. In view of the aforesaid, we have no hesitation in reaching the conclusion that the subject property is a “residential dwelling”. In the case on hand, the ultimate use of the property as residence remains unchanged. However, if 18% GST is levied on this transaction between the respondent No. 1 and the lessee i.e. M/s DTwelve Spaces Private Limited, the same would ultimately be passed on to the students and working professionals which would lead to a situation where the legislative intent behind granting exemption for residential use is defeated - from 18.07.2022, there is no exemption available for respondent 1, as he has rented to a registered person. Through these appeals, the revenue is, in effect, trying to give retrospective application to the amendment made in 2022, which is impermissible - The Explanation clearly shows that even if the rent is paid by a registered person, the exemption will be available if it is used for the purpose of own residence and is rented in the personal capacity. Therefore, the intention from the beginning was to ensure that rental agreements for use of the property for residential purposes are granted exemption from GST. Application disposed off.

2025 (12) TMI 306 - AUTHORITY FOR ADVANCE RULING, GUJARAT GST

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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".

(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.

Student, worker hostels via commercial lease not exempt as residential renting under Entry 12, taxable under Sl.16(iii)
AAR (Guj) held that the applicant's leasing of a commercially classified property to an unregistered lessee for providing long-term accommodation to students and working professionals does not qualify as exempt "renting of residential dwelling for use as residence" under Entry 12 of Notification No. 12/2017-CT (Rate). The lessee was not using the premises as its own residence but for a commercial activity of supplying accommodation, defeating the exemption's personal residential-use requirement. The supply was classified under Sl. No. 16(iii) of Notification No. 11/2017-CGST (Rate) as renting of immovable property, taxable at 18%. Being registered under GST, the applicant is liable to discharge GST on such rental income.

Exemption from GST - service of renting of Residential building provided by the Applicant to the Lessee, an unregistered person, for use as residential accommodation for the students and working professionals - exempt as per S. No. 12 of the Exemption Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 or not - person liable to pay GST on the impugned service of renting of residential dwelling - applicable rate of GST - Exemption from GST - service of renting of Residential building provided by the Applicant to the Lessee, an unregistered person, for use as residential accommodation for the students and working professionals - exempt as per S. No. 12 of the Exemption Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 or not - HELD THAT:- The applicant has leased a property co-owned by 6 other owners to M/s Ashmira Living Private Limited, which is not registered under GST. As per the agreement, which is to be entered between the applicant and the lessee, the lessee would use the property for providing long-term residential accommodation to the students and working professionals. The applicant wants to know whether the use of the property as residential accommodation to the students and working professionals is exempt as per Entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 and if no, who would be liable to pay GST on the impugned service of renting of residential dwelling and the applicable rate of GST. In P.N. Karkhanis case [1976 (11) TMI 218 - DELHI HIGH COURT], the High Court was dealing with the eviction notice issued under the Delhi Rent Control Act to the petitioner. One of the pleas taken before the High Court was that the premises was let out for residence but was being used for office-cum-residential purpose by the petitioner. The High Court interpreted the “residential accommodation” used in section 14A (1) of the Delhi Rent Control (Amendment)Act, 1976 and held that even if a part of the premises was used as an office, it would not convert a residential accommodation into a non-residential accommodation - It is not understood as to how this interpretation of residential accommodation is of help to the applicant as we find that the property belonging to the applicant is a commercial property. There are support in this by going through the draft lease agreement submitted by the applicant themselves during the course of hearing. When a registered person rents the property to a registered person, the exemption is not available. Further amendments by way of Explanations clarify that the exemption would be available only if the registered person uses it as his own residence and also has not rented in the capacity of a proprietorship firm. These amendments make it clear that the intention of the Government has been to exempt only those supplies of renting of immovable property which are used as residences in the personal capacity and are not used for commercial purposes, be it by a registered person or a non registered person - this is not the case for the applicant, as the lessee was not using the said property for their own residential purpose but were using it for commercial purposes i.e. providing residential accommodation to students/working professionals. Therefore, the applicant is not eligible for exemption under Entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017. Who shall be the person liable to pay GST on the impugned service of renting of residential dwelling and the applicable rate of GST? - HELD THAT:- The services provided by the applicant would more aptly fall under SI. No. (iii) of Entry No. 16 of Notification 11/2017-CGST(R) dtd. 28.06.2017 and would attract GST @ 18 %. Since, the applicant is registered under GST, they would be liable to pay tax on the supply made by them.

2025 (11) TMI 848 - MADRAS HIGH COURT Indian Laws

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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.

End-use of hostel premises governs tariff classification; residential occupation defeats commercial tax and charge demands.
Hostel rooms used by working men and women for sleeping, eating and daily living were treated as residential in character because the decisive factor is the occupants' actual end-use, not the owner's business activity. On that basis, commercial rates for property tax, water tax, water charges and electricity charges were held inapplicable. The Court also treated the writ petitions as maintainable despite the statutory appeal because the challenge raised a pure legal question on classification and there was no prior notice before conversion of the tariff, amounting to a breach of natural justice. The impugned demand notices were quashed and the premises directed to be treated as residential units.

Nature of Hostel Premises - Petitioners' property to be treated as commercial premises for the purpose of levying property tax, water tax, water charges and electricity charges by looking from the perspective of service provider or not - filing of present petitions on the aspect of violation of principles of natural justice, in spite of the alternate remedy available in terms of Section 100 of the 1998 Act - main contention of the petitioners was that the impugned demand notices were issued by the concerned respondents without any proper prior notice. Whether the petitioners' property be treated as commercial premises for the purpose of levying property tax, water tax, water charges and electricity charges by looking from the perspective of service provider? - HELD THAT:- If the petitioners' hostels were treated as commercial unit, it will be a clear discrimination against the poor. The Legislation was not intend to charge more for poor and keep the rich in comfortable position by levying tax at lower rate of tariff. Even for example, if commercial tariff is applied, a person residing in hostel has to pay double the amount towards property tax and water tax, whereas, the person, living in bungalow/apartment, who is able to spend higher amount towards rent, will be eligible for payment of property tax, water tax, water charges, etc., at concessional rate, which is applicable for residential unit. If the respondents' contentions are accepted, the poor and lower middle class people, who are living in hostel, will be deprived of the said concession, and this discrimination is not permissible under the Constitution of India. Thus, it is clear that activities carried on at the petitioners' hostels are only residential in nature and it is not commercial. Therefore, the issue is hereby answered by holding that the petitioners' property cannot be considered as commercial property and thus, the commercial tariff will not apply for the petitioners' properties. In spite of the alternate remedy available in terms of Section 100 of the 1998 Act, whether the petitioners can file the present petitions on the aspect of violation of principles of natural justice? - HELD THAT:- Though an alternate remedy is available for the petitioner in terms of Section 100 of 1998 Act, they can also agitate before this Court by way of filing writ petitions on the aspect of violation of principles of natural justice and there is no bar for the petitioners to approach this Court without filing statutory appeal, which will be filed only on the factual aspects and not on legal issues. When a legal issue raised, the same shall be entertained by this Court by invoking the powers available under Article 226 of the Constitution of India. When a similar issue arise in GST Matter, the same petitioners filed a batch of writ petition before this Court in W.P.No.28486 of 2023, etc. [2024 (3) TMI 1271 - MADRAS HIGH COURT]. In the said batch of writ petitions, this Court, vide order dated 22.03.2024, had arrived at a conclusion by holding that the nature of activities carried on by the petitioners therein for the purpose of levying GST has to be considered/looked into from the perspective of the usage of premises by the recipients of service and it is immaterial to consider the aspect as to how the petitioners, being the owners of the premises, are considering the receipt of rent from the tenant and treating the same in his books of account. Further, in that case, this Court had arrived at a categorical conclusion that the hostel rooms were used by the inmates only as a sleeping apartment and the same would fall under the category of residential premises - Even in the above case, this Court has already laid down the law that the hostel rooms, which were used by working men/women or student as sleeping apartment after their avocation, has to be considered as “residential unit” and the same yardstick will squarely apply in the present case also. The nature of activities carried on by the petitioner is only residential in nature and accordingly, the residential tariff will apply for the purpose of levying the property tax, water tax and water charges for the petitioners' properties - It is needless to state that if the property tax as well as the water tax are required to be collected in the residential tariff and ultimately, the electricity charges is also required to be collected only in the residential tariff - there is a clear violation of principles of natural justice. In these cases, no notice was issued to the petitioners prior to the conversion of petitioners' properties from residential tariff into commercial tariff. Therefore, on this aspect also, the impugned notices are liable to be quashed. All the impugned notices are liable to be quashed. Accordingly, the same are quashed. While quashing the demand notices, the respondents are directed to treat the petitioners' property as “residential unit” and levy the taxes, such as property tax, water tax and electricity charges, accordingly. Petition allowed.

2025 (12) TMI 78 - KARNATAKA HIGH COURT GST

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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.

Hostel rentals for students and staff treated as residential dwelling, exempt from GST under Notification 9/2017 Entry 13
HC held that rent received from leasing residential premises used as hostels for students, teachers and staff qualifies as "renting of residential dwelling for use as residence" under Entry 13 of Notification 9/2017, and is therefore exempt from GST. Relying on its earlier Division Bench ruling on the same notification, HC concluded that such rental income is not exigible to GST. Consequently, the impugned order rejecting the exemption and refund was quashed. The matter was remitted to the tax authorities with a direction to reconsider the petitioner's refund application afresh within a stipulated period, in accordance with the exemption.

2024 (11) TMI 1037 - AUTHORITY FOR ADVANCE RULING, TAMIL NADU GST

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Hostel accommodation services don't qualify for GST exemption under residential dwelling provisions, taxable at 18%
The AAR Tamil Nadu ruled that hostel accommodation services do not qualify for GST exemption under residential dwelling provisions. The authority held that hostels are not equivalent to residential dwellings and are not rented for use as residence, requiring strict interpretation of exemption notifications. The applicant must register for GST if turnover exceeds Rs. 20 lakh. Hostel accommodation services are taxable at 18% GST (9% CGST + 9% SGST) under tariff heading 9963. When food and other services are bundled with accommodation at a single consolidated price, it constitutes a composite supply taxable at the principal supply rate of 18%.

Exemption under Entry 12 of Notification No. 12/2017 (services by way of renting of residential dwelling for use as residence) - meaning of "residential dwelling" and "use as residence" for tax exemption - distinction between hostel/accommodation services and residential dwelling - classification under Heading 9963 (Accommodation, food and beverage services) - composite supply and principal supply - registration liability on crossing the aggregate turnover thresholdExemption under Entry 12 of Notification No. 12/2017 (services by way of renting of residential dwelling for use as residence) - meaning of "residential dwelling" and "use as residence" for tax exemption - Hostel accommodation supplied by the applicant is eligible for exemption under Entry 12 of Notification No.12/2017 or not - HELD THAT: - The Authority held that the phrase "residential dwelling" is not defined in the GST Act or the notification, but under prior administrative guidance it denotes accommodation ordinarily used as a home and not places meant for temporary stay such as hotels, inns or guest houses. Renting of residential dwelling ordinarily involves letting a house or part thereof for use as a home by a person or family without bundled services like food and housekeeping. The applicant's premises are subdivided and let on a per-bed basis with bundled services (food, housekeeping, security etc.), licences and certificates applicable to public or commercial buildings are obtained, and there is no landlord-tenant relationship typical of letting a residential dwelling to a family. The Authority further emphasised that exemption notifications are to be strictly construed and the object of the exemption is to exclude taxing residential properties taken on rent by families or individuals. On these facts, the hostel accommodation does not qualify as a "residential dwelling for use as residence" and therefore does not fall within the Entry 12/Entry 13 exemption. [Paras 7]The services of providing hostel accommodation are not eligible for exemption under Entry 12 of Notification No.12/2017 (and identical entries under state/IT notifications).Registration liability on crossing the aggregate turnover threshold - supply in course of furtherance of business - Whether the applicant is required to obtain GST registration - HELD THAT: - Having held that the hostel accommodation is a supply of services in the course of furtherance of business (and not an exempt supply under the cited entry), the Applicant is a supplier of taxable services. Section 22 requires registration where aggregate turnover in a financial year exceeds the prescribed threshold. The Authority therefore concluded that the applicant must obtain registration in Tamil Nadu if its aggregate turnover in a financial year exceeds twenty lakh rupees. [Paras 7]The applicant is required to register under the GST Acts if aggregate turnover in a financial year exceeds twenty lakh rupees.Classification under Heading 9963 (Accommodation, food and beverage services) - tax rate under Notification No.11/2017 as amended - Tariff heading and rate applicable to the supply of hostel accommodation - HELD THAT: - The Authority examined the entries in Notification No.11/2017 (as amended) and distinguished hotel accommodation (temporary stay with many facilities) from hostel accommodation (longer stay, basic facilities). It concluded that hostel accommodation falls within Heading 9963 and, specifically, within the entry for "Accommodation, food and beverage services other than (i)-(v)", thus attracting the rate provided in Sl. No. 7(vi) of the Notification. The Authority recorded that such hostel accommodation is taxable under the Notification at the rate stated for that entry. [Paras 7]Hostel accommodation services fall under Tariff heading 9963 and are taxable under Sl. No. 7(vi) of Notification No.11/2017, as amended.Composite supply and principal supply - tax treatment of composite supply with principal supply - Whether in-house food supplied to inmates is exempt as part of a composite exempt supply or taxable as part of a composite supply and the rate applicable - HELD THAT: - The Authority applied the definition of "composite supply" (single supply consisting of naturally bundled supplies where one is principal). The applicant provides accommodation and ancillary services (food etc.) for a single consolidated charge; thus the supplies are composite and the accommodation is the principal supply. Under Section 8, the tax rate applicable to the composite supply is the rate of the principal supply. The Authority held that the principal supply is the hostel accommodation provided by the applicant and therefore the composite supply is taxable at the rate applicable to that principal supply. (The Authority's reasons and conclusions on the principal-supply rule are set out in para 7.4.1-7.4.3 and reflected in the Ruling.) [Paras 7]The in-house food supplied as part of the consolidated charge forms a composite supply; the tax rate of the principal supply (hostel accommodation) applies to the composite supply.Final Conclusion: The Authority ruled that the applicant's hostel accommodation is not an exempt "residential dwelling for use as residence" under the cited exemption notifications; the applicant must obtain GST registration if its aggregate turnover exceeds the statutory threshold; hostel services are classifiable under Heading 9963 and taxable under the relevant entry of Notification No.11/2017 as amended; and in-house food supplied with accommodation constitutes a composite supply taxable at the rate of the principal supply.

2024 (8) TMI 294 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA GST

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Hostel stays over 10 months qualify for GST exemption as residential dwelling under Notification 12/2017
The AAR Maharashtra ruled on GST exemption eligibility for hostel accommodation services under Notification 12/2017. The authority held that 10-month hostel stays constitute "residential dwelling" and qualify for tax exemption, following Madras HC precedent in Thai Mookambikaa Ladies Hostel case. However, 1-2 month vacation stays for new students were deemed temporary accommodation, ineligible for exemption. For existing students extending their 10-month tenure by 1-2 months during vacations, the authority granted exemption, reasoning that the extension maintains the residential nature of their original long-term stay.

Renting of residential dwelling for use as residence - composite supply - principal supply - residential dwelling versus temporary stay - exemption under Notification 12/2017-Central Tax (Rate)Renting of residential dwelling for use as residence - composite supply - exemption under Notification 12/2017-Central Tax (Rate) - Supply of hostel accommodation with mandatory mess and other amenities for a 10 month academic stay is eligible for exemption under Serial Number 12 of Notification 12/2017-Central Tax (Rate). - HELD THAT: - The Authority found that the applicant supplies hostel accommodation together with mandatory mess and ancillary facilities as a single bundled supply, the accommodation being the predominant or principal supply and other services being ancillary, thereby constituting a composite supply taxed according to the principal element. Relying on purposive construction of "residential dwelling" (including hostels used by students), precedents of Madras High Court and Karnataka High Court, and absence of any binding contrary decision of the Bombay High Court or Supreme Court, the Authority held that where inmates stay for the academic term (months together) and use the premises as residence, the renting falls within the exempt entry. The factual matrix (compulsory mess, single receipt, long term allotment for academic year) supports characterization as residential use and entitlement to exemption under the said notification.Affirmative - exemptResidential dwelling versus temporary stay - exemption under Notification 12/2017-Central Tax (Rate) - Supply of hostel accommodation with mandatory mess and amenities to new students for a 1-2 month vacation stay is not eligible for exemption under Serial Number 12 of Notification 12/2017-Central Tax (Rate). - HELD THAT: - The Authority distinguished stays of short duration from "residence" on the basis that the term "residence" connotes stay for a considerable or permanent period. Applying guidance from the cited precedents and the Supreme Court's definition of "residence," the Authority inferred that the exempt entry contemplates stays of months together (generally three months or more as indicated in the reasoning) and that a 1-2 month vacation stay by a new student amounts to temporary accommodation rather than a residential use qualifying for the exemption.Negative - not exemptResidential dwelling versus temporary stay - exemption under Notification 12/2017-Central Tax (Rate) - Supply of hostel accommodation with mandatory mess and amenities to returning (old) students who previously stayed for the 10 month academic term and extend for 1-2 months in vacation is eligible for exemption under Serial Number 12 of Notification 12/2017-Central Tax (Rate). - HELD THAT: - The Authority held that where an inmate's earlier occupation of the hostel for the academic term constituted residential use, a subsequent short extension of that stay does not convert the nature of use into temporary accommodation. The extension is treated as a continuation of the earlier residential tenure; consequently, such supplies remain within the scope of the exempt entry.Affirmative - exemptFinal Conclusion: The Authority ruled that hostel accommodation supplied to students for the 10 month academic term (and extensions by returning students) qualifies as renting of a residential dwelling and is exempt under Serial Number 12 of Notification 12/2017 Central Tax (Rate); however, a 1-2 month vacation stay by new students is temporary and not eligible for that exemption.

2024 (3) TMI 1271 - MADRAS HIGH COURT GST

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Hostel rooms rented to unregistered girl students and working women treated as residential dwelling, GST exemption upheld
The dominant issue was whether letting out hostel rooms to unregistered girl students and working women constitutes "renting of residential dwelling for use as residence" exempt under Entry 12 (and allied entries) of Notification No. 12/2017-Central Tax (Rate). The HC held that end-use by the occupants governs exemption, not the nature of the premises or the service-provider's business; hostel rooms used for sleeping, eating and other residential activities qualify as "residential dwelling" even with common facilities, applying purposive interpretation of exemption notifications. Consequently, the accommodation service was held exempt and the adverse advance ruling orders were set aside, allowing the petitions.

Interpretation of exemption notification - Services by way of renting of residential dwelling for use as residence - Hostel accommodation as residential dwelling - Burden of proof on assessee to claim exemption - Alternate remedy and futility doctrine - Taxability to be assessed from recipient's perspectiveAlternate remedy and futility doctrine - Binding effect of higher authority's order - Maintainability of writ petitions despite existence of statutory appeal - HELD THAT: - The Court held that availability of a statutory appeal under the GST enactments does not preclude the exercise of writ jurisdiction where pursuing the alternate remedy would be a mere exercise in futility. That principle applies where a superior forum or a Division Bench of a High Court has already taken a binding view which subordinate/adjudicatory authorities refuse to follow. Relying on the reasoning in Filterco and subsequent High Court decisions, the Court found that because the Appellate Authority for Advance Ruling had failed to follow the earlier Division Bench decision of the Karnataka High Court, the petitioners were justified in approaching the High Court under Article 226 instead of being relegated to an appeal which would be unlikely to afford effective relief. [Paras 13, 16, 19]Writ petitions are maintainable; alternate remedy by appeal is not an absolute bar where pursuit of that remedy would be futile in view of binding precedent and non-compliance by the authority.Services by way of renting of residential dwelling for use as residence - Hostel accommodation as residential dwelling - Interpretation of exemption notification - Burden of proof on assessee to claim exemption - Taxability to be assessed from recipient's perspective - Whether services provided by the petitioners' ladies hostels fall within Entry No.12 of Notification No.12/2017 and are therefore exempt from GST - HELD THAT: - The Court analysed the expression 'residential dwelling' in the exemption notification in light of dictionary meanings, earlier judicial decisions (including Bandu Ravji Nikam and the Division Bench of the Karnataka High Court in Taghar Vasudeva Ambrish), and the CBIC educational guide. It held that 'residence' and 'dwelling' have their ordinary/poplular connotation and that a hostel used by students or working women for sleeping, eating and related residential activities constitutes a 'residential dwelling' for the purposes of the notification. The Court emphasised that the correct approach is to view taxability from the recipient's perspective - whether the end-use is residential - and not from the status or licensing of the service provider. Because the inmates (students and working women) were using the hostel premises as their residence and were not using the premises for any commercial activity, the conditions of Entry No.12 were satisfied. The Court also noted the assessee bears the burden to prove entitlement to exemption but found that the facts established met that burden. [Paras 49, 56, 64, 66]Hostel services provided by the petitioners to student and working women qualify as 'services by way of renting of residential dwelling for use as residence' under Entry No.12 of Notification No.12/2017 and are exempt from GST; the impugned rulings denying exemption are set aside.Final Conclusion: The writ petitions are allowed. The Court held the petitions maintainable despite the availability of statutory appeal and declared that the ladies hostel services furnished to students and working women fall within the exemption under Entry No.12 of Notification No.12/2017; the impugned orders of the State Appellate Authority for Advance Ruling are set aside.

2023 (12) TMI 1002 - CALCUTTA HIGH COURT Central Excise

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Exemption for yarn sold to apex handloom societies upheld where notification conditions were met; added end-use proof could not be imposed.
The exemption under the central excise notifications applied to yarn sold to a registered apex handloom co-operative society, NHDC, or a State Government handloom development corporation, where payment was made by account payee cheque from the purchaser's own account and a clearance certificate for use on handlooms was produced. On the evidence, those conditions were satisfied, and the record did not support the claim that the goods were sold to traders. The Court reiterated that exemption provisions are construed strictly, but authorities cannot read into the notification a further requirement of proof of actual end use when the text does not impose it. The demand of duty, interest and penalty was therefore unsustainable.

Exemption notification conditions - Onus of proof for exemption - Acceptance of certificate of intended use issued by apex handloom cooperative societies - Evidence required to deny benefit of exemption - Prohibition on importing extraneous or actual use conditions into taxation notifications - Strict construction of exemption as exception and liberal application once applicability is establishedOnus of proof for exemption - Evidence required to deny benefit of exemption - Whether the respondent bore the onus to prove compliance with the conditions in the exemption notification and whether the adjudicating authority validly disbelieved the documentary evidence produced by the respondent. - HELD THAT: - The Tribunal found, and this Court agreed, that the respondent had produced the documentary prerequisites mandated by the notification - sales to the registered apex handloom co-operative societies and payment by cheque from their own bank accounts - together with certificates from those apex bodies stating the yarn was intended for handloom use. The adjudicating authority's contrary conclusion rested on surmise and conjecture about subsequent dealings and on an inability or unwillingness to produce positive evidence controverting the certificates. In a taxation statute context, the Court held that denial of exemption cannot be predicated on mere presumption; where the assessee fulfills the conditions in the notification and the revenue produces no evidence to rebut the certificates and payments, the onus to show non-compliance is not discharged. The Tribunal's factual findings on these points were not shown to be perverse and were thus upheld. [Paras 13, 17, 18]The respondent satisfied the onus imposed by the notification; the adjudicating authority's disbelief of the documentary proof was unsupported and was set aside.Exemption notification conditions - Acceptance of certificate of intended use issued by apex handloom cooperative societies - Whether the two conditions in the notification - sale to the specified apex bodies and production of certificate that the yarn was to be used only on handlooms - were fulfilled by the respondent. - HELD THAT: - The Court examined the notification's wording and the factual record: the yarn was purchased by the registered apex handloom co-operative societies (Tantuja and Tantusree), payments were made by account payee cheques drawn on their own accounts, and certificates were produced at the time of clearance stating intended use in handlooms. The Tribunal accepted expert letters and the certificates and found no evidence that the yarn was actually used otherwise. The High Court emphasised that the notification did not require proof of ultimate end-use by each weaver and that the apex bodies were entrusted with distribution. Consequently, the conditions as worded in the notification were met and entitlement to exemption followed. [Paras 15, 16]All conditions of the exemption notification were satisfied by the respondent; the Tribunal rightly granted the exemption.Prohibition on importing extraneous or actual use conditions into taxation notifications - Strict construction of exemption as exception and liberal application once applicability is established - Whether the adjudicating authority could read into the notification an obligation on the manufacturer to ensure actual end-use or to treat apex bodies as mere agents/commissioners rather than purchasers. - HELD THAT: - The Court reiterated established principles of construing exemption notifications: while exemptions (being exceptions) are interpreted strictly, once applicability on the wording is established, the exemption must be given full effect. The adjudicating authority impermissibly attempted to add conditions not found in the notification by drawing inferences about downstream distribution and the role of traders. The Court held that equity or speculative inferences have no place in taxation interpretation and that nothing in the notification required the manufacturer to guarantee ultimate actual use by the handloom weaver or to establish that apex bodies were not bona fide purchasers. The Tribunal's refusal to import such extraneous conditions was therefore lawful. [Paras 16, 18, 19]The adjudicating authority erred in importing extraneous actual-use or agency conditions; the Tribunal correctly refused to read such conditions into the notification.Final Conclusion: The High Court dismissed the revenue's appeal, holding that the Tribunal correctly found satisfaction of the notification's conditions - sale to registered apex handloom co-operative societies, payment by cheque from their own accounts, and production of certificates of intended use - and correctly declined to import extraneous conditions; the adjudication denying exemption and imposing duty, interest and penalty was set aside.

2023 (12) TMI 516 - SC Order GST

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Judicial Relief Granted: Time Barrier Lifted for Case Progression Under Condonation of Delay Provisions
SC granted condonation of delay and leave in the case. Justices Bose and Masih presided over the proceedings, scheduling the next hearing for 24.01.2024. The order allows the case to proceed despite previous time limitations.

2023 (12) TMI 510 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA GST

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Renting bed spaces with mandatory amenities to students attracts 12% GST as accommodation service, not residential dwelling exemption
AAR Karnataka ruled that renting bed spaces to students and working women with mandatory amenities like food, furniture, and cleaning services does not qualify as "residential dwelling" exemption under GST Notification 12/2017. The accommodation lacks individual kitchens and permanent stay characteristics, resembling paid guest house services. The service attracts 12% GST under SAC 996311 as accommodation with housekeeping services. The applicant can claim input tax credit subject to statutory conditions under CGST Act sections 16-17.

Renting of residential dwelling for use as residence - residential dwelling (scope and characteristics) - unit of accommodation / paid guest / hostel style units - exemption under Notification No. 12/2017 (renting of residential dwelling) - classification under SAC 9963 / SAC 996311 (accommodation services) - taxability under Notification No. 11/2017 entry 7(i) at 12% - availment of input tax credit subject to Sections 16 & 17Renting of residential dwelling for use as residence - residential dwelling (scope and characteristics) - unit of accommodation / paid guest / hostel style units - exemption under Notification No. 12/2017 (renting of residential dwelling) - Whether the accommodation provided by the applicant qualifies as 'renting of residential dwelling for use as residence' and is exempt under entry 12 of Notification No. 12/2017 CTR. - HELD THAT: - The Authority held that the term 'residential dwelling' is not defined in GST but, as guided by erstwhile CBIC education material and common parlance, denotes residential accommodation meant for permanent or long term stay and ordinarily includes features such as exclusive use of a room, kitchen/cooking facility and metered utilities. The applicant offered single/double/triple occupancy units where rent is charged per bed/unit, inhabitants are unrelated and share rooms, cooking by inhabitants is prohibited and meals and other services are mandatorily provided as part of the monthly charge. The Residential Service Agreement and mode of charging (per bed, fixed utility/maintenance charges, minimum term, shared common facilities and restrictions on cooking) demonstrate that the supply is unit accommodation akin to paid guest/hostel services and not renting of an entire residential dwelling for use as a residence. Consequently the services do not satisfy the essential characteristics required for exemption under entry 12 of Notification No. 12/2017 CTR and are not covered by that exemption. [Paras 16, 17, 18, 19, 21]The services provided by the applicant do not qualify as 'renting of residential dwelling for use as residence' and are not exempt under entry 12 of Notification No. 12/2017 CTR.Classification under SAC 9963 / SAC 996311 (accommodation services) - taxability under Notification No. 11/2017 entry 7(i) at 12% - unit of accommodation / room or unit accommodation services - If not exempt, how the impugned services are to be classified and the applicable rate of GST. - HELD THAT: - The Authority classified the impugned supply as accommodation services falling under SAC 9963, specifically room or unit accommodation services under SAC 996311, since the applicant provides rooms/units without individual kitchens and with daily housekeeping/ancillary services on a single or multi occupancy basis. Applying the rate schedule, such services fall under entry 7(i) of Notification No. 11/2017 CTR and, given the charge per unit per person is below the specified threshold, attract GST at the rate provided by that entry. The Authority accordingly applied the applicable rate to the classified service. [Paras 22, 24]The impugned services are classifiable under SAC 9963 (SAC 996311) and attract GST at 12% under entry 7(i) of Notification No. 11/2017 CTR.Availment of input tax credit subject to Sections 16 & 17 - input tax credit on inputs used for providing taxable accommodation services - Whether the applicant can claim input tax credit on inputs used for providing the taxable services. - HELD THAT: - The Authority noted that entry 7(i) of Notification No. 11/2017 CTR does not prohibit availment of input tax credit. Therefore, entitlement to ITC depends on satisfaction of the general statutory conditions for credit under Sections 16 and 17 of the CGST Act and the corresponding rules. No specific restriction was found in the rate notification that would deny ITC for the applicant's supplies; claimability is subject to the ordinary legal requirements for ITC. [Paras 23, 24]The applicant may claim input tax credit on inputs used in providing the taxable services subject to fulfilment of the conditions under Sections 16 & 17 of the CGST Act, 2017 and related rules.Final Conclusion: The Authority ruled that the applicant's shared unit accommodation with mandatory services does not qualify as 'renting of residential dwelling for use as residence' and is not exempt under Notification No. 12/2017 CTR; the services are classifiable under SAC 9963 (SAC 996311) and attract GST at 12% under Notification No. 11/2017 CTR entry 7(i); and the applicant may avail ITC subject to conditions in Sections 16 and 17 of the CGST Act, 2017.

2023 (9) TMI 1647 - AUTHORITY FOR ADVANCE RULING, TAMIL NADU GST

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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.

Hostel accommodation for students and working women taxable at 18% GST, not exempt as residential dwelling
AAR Tamil Nadu ruled that hostel accommodation services provided to students and working women do not qualify as "residential dwelling for use as residence" under GST exemption notification. The applicant must register under GST if turnover exceeds Rs. 20 lakh annually. Hostel accommodation falls under tariff heading 9963, taxable at 18% GST (9% CGST + 9% SGST). When food and other services are bundled with accommodation, it constitutes composite supply taxed at the principal supply rate of 18%. The authority distinguished hostels from residential dwellings, noting hostels involve per-bed rental with bundled services constituting commercial accommodation rather than residential property rental.

Services by way of renting of residential dwelling for use as residence - exemption notification should be interpreted strictly - residential dwelling - composite supply - principal supply - registration under Section 22 - taxable supplyServices by way of renting of residential dwelling for use as residence - residential dwelling - exemption notification should be interpreted strictly - Whether the hostel accommodation provided by the applicant is eligible for exemption as 'renting of residential dwelling for use as residence'. - HELD THAT: - The expression 'residential dwelling' is not defined in the CGST Act or the exemption notification; the erstwhile CBIC guide treats 'residential dwelling' in trade parlance as residential accommodation excluding hotels, guest houses and like places meant for temporary stay. Renting of residential dwelling ordinarily involves letting a house or part thereof to a person/family as a home, without bundled amenities like food or housekeeping. The applicant lets beds on a per-bed basis with bundled services (food, housekeeping, security, etc.), issues consolidated invoices and operates under licences and certificates that apply to hostels/public buildings, not to typical residential dwellings. Zoning permissibility does not convert a commercial hostel into a residential dwelling for tax exemption purposes. Precedents relied upon by the applicant are factually distinguishable and not in the GST context. Exemption notifications must be strictly construed and the burden lies on the assessee to demonstrate entitlement. Applying these principles, the Authority finds that the premises and the arrangement constitute commercial hostel accommodation and not 'residential dwelling for use as residence', and therefore the exemption entry does not apply. [Paras 7]Hostel accommodation supplied by the applicant is not eligible for exemption under the cited exemption entries.Taxable supply - registration under Section 22 - Whether the applicant is required to obtain GST registration. - HELD THAT: - Having held that the activity is not an exempt supply but a supply of services in the course of business, the transactions fall within the definition of 'supply' under the GST law. As a supplier of taxable services, the applicant is liable to register under the GST Acts if aggregate turnover in a financial year exceeds the statutory threshold specified for registration. [Paras 7]The applicant must obtain registration in Tamil Nadu if aggregate turnover in a financial year exceeds twenty lakh rupees.Tariff heading 9963 - taxable supply - Tariff classification and rate applicable to the supply of hostel accommodation. - HELD THAT: - Hostel accommodation is not equated with hotel accommodation which is for temporary stay and offers a different range of facilities; hostels are used for longer periods with basic facilities. The Authority classifies the supply under Tariff heading 9963 (Accommodation, food and beverage services) and, applying Notification No. 11/2017 as amended, places the applicant's hostel services under the entry covering 'Accommodation, food and beverage services other than (i) to (v)' and concludes the applicable rate under that entry. The Authority therefore prescribes the applicable GST rate accordingly. [Paras 7]Supply of hostel accommodation falls under Tariff heading 9963 and is taxable @ 9% CGST + 9% SGST under Sl.No. 7(vi) of Notification No. 11/2017 as amended.Composite supply - principal supply - Whether in-house food supplied to inmates is exempt as part of a composite exempt supply, and the tax rate applicable to the composite supply. - HELD THAT: - A 'composite supply' arises where two or more supplies are naturally bundled and supplied in conjunction with one another for a single price and one is the principal supply. The applicant provides accommodation and bundled ancillary services (food, housekeeping) for a consolidated charge; the principal supply is hostel accommodation. The tax on a composite supply follows the rate of the principal supply. The Authority applies this principle to hold that the composite nature is established and the rate of tax for the composite supply is to follow the rate applicable to the principal supply as determined by the Authority. [Paras 7]In-house food supplied to inmates forms part of a composite supply; the tax rate of the composite supply follows the principal supply as determined by the Authority.Scope of Section 97(2) - Admissibility/ruling on Question No. 5. - HELD THAT: - Question No. 5 falls outside the scope of matters on which an advance ruling can be given under Section 97(2) of the GST Act. Consequently, the Authority declines to pronounce a ruling on that question. [Paras 6, 7]No ruling is issued on Question No. 5 as it does not fall within the scope of Section 97(2).Final Conclusion: The Authority rules that the applicant's ladies hostel accommodation is not exempt as 'renting of residential dwelling for use as residence'; the applicant must obtain GST registration if turnover exceeds the threshold; hostel accommodation is classified under Tariff heading 9963 and taxable as held by the Authority; in-house food forms part of a composite supply and the tax on the composite supply follows the principal supply; no ruling is given on Question No. 5 as it falls outside the advance ruling jurisdiction.

2023 (9) TMI 1646 - AUTHORITY FOR ADVANCE RULING, TAMIL NADU GST

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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.

Hostel accommodation services for students and working women don't qualify for GST exemption under Entry 12 Notification 12/2017
AAR Tamil Nadu ruled that hostel accommodation services provided to students and working women do not qualify as "residential dwelling for use as residence" under GST exemption Entry 12 of Notification 12/2017. The authority held that hostels constitute business accommodation services, not residential dwellings, requiring GST registration if turnover exceeds Rs. 20 lakh annually. Hostel services are taxable at 18% GST under tariff heading 9963 as composite supply, with accommodation being the principal service bundled with ancillary services like food.

Services by way of renting of residential dwelling for use as residence - strict interpretation of exemption notification - composite supply and principal supply - registration requirement for supplier where aggregate turnover exceeds threshold - classification under Heading 9963 (Accommodation, food and beverage services) - applicability of rate notifications to hostel accommodationServices by way of renting of residential dwelling for use as residence - strict interpretation of exemption notification - Whether the hostel accommodation provided by the applicant is eligible for exemption under the entry covering services by way of renting of residential dwelling for use as residence. - HELD THAT: - The Authority found that the phrase 'residential dwelling' is not defined under the GST law and must be given its common parlance meaning - a home or abode used as residence. Hostels, which provide lodging to specific categories (students, workers) on a per-bed basis with bundled services (food, housekeeping, security) and are run as commercial/public premises with statutory licensing and certificates, do not retain the character of a residential dwelling for use as residence. The conversion of residential homes into commercial hostel premises, absence of landlord-tenant characteristics typical of renting a dwelling to a family, and the regulatory regime applicable to hostels support that hostels are non-residential/commercial. Exemption notifications must be strictly construed and the burden of establishing applicability lies on the applicant; the twin conditions of 'renting of residential dwelling' and 'use as residence' must both be satisfied and are not met here. Consequently the hostel accommodation does not qualify for the exemption entry relied upon by the applicant. [Paras 7]Hostel accommodation supplied by the applicant is not eligible for exemption under the entry for renting of residential dwelling for use as residence.Registration requirement for supplier where aggregate turnover exceeds threshold - supply in the course or furtherance of business - Whether the applicant is required to obtain GST registration. - HELD THAT: - Having held that the applicant's activities constitute supply of services in furtherance of business (accommodation and ancillary services) and are not exempt, the Authority applied the registration threshold rule: every supplier of services making taxable supplies must register if aggregate turnover in a financial year exceeds the prescribed threshold. The transaction between the applicant and hostel occupants is taxable supply and therefore registration is required subject to the turnover condition. [Paras 7]The applicant must obtain GST registration in Tamil Nadu if its aggregate turnover in a financial year exceeds twenty lakh rupees.Classification under Heading 9963 (Accommodation, food and beverage services) - applicability of rate notifications to hostel accommodation - The tariff classification and rate of tax applicable to the applicant's hostel accommodation services. - HELD THAT: - The Authority distinguished hostel accommodation from hotel accommodation. On the basis of the notifications reproduced and the character of hostel services (longer stay, basic facilities), the supply falls under Heading 9963 and is covered by the entry for 'Accommodation, food and beverage services other than (i)-(v)' in the rate notification. Consequently, the applicable tax rate for the hostel accommodation supply is 9% CGST and 9% SGST (i.e., Sl. No. 7(vi) of Notification No. 11/2017 as amended). [Paras 7]Hostel accommodation services supplied by the applicant are classifiable under Heading 9963 and taxable at 9% CGST + 9% SGST under the relevant notification entry.Composite supply and principal supply - tax incidence of composite supplies - Whether in-house food supplied to hostel inmates is exempt when provided along with accommodation, and if not, the tax treatment of the composite service. - HELD THAT: - The Authority applied the statutory definition of composite supply: where multiple supplies are naturally bundled and one is the principal supply, the tax rate of the principal supply governs the composite supply. The applicant provides accommodation as the principal activity with food and other services bundled and charged on a consolidated basis. Since accommodation (the principal supply) is taxable (as held above), the entire composite supply is taxable at the rate applicable to the principal supply. The Authority therefore treated the composite supply as taxable at the combined rate applicable to the principal supply. [Paras 7]In-house food supplied along with hostel accommodation forms a composite supply whose tax rate is that of the principal supply; the composite supply is taxable at the tax rate applicable to the hostel accommodation (aggregate 18%).Admissibility of advance ruling questions under Section 97(2) - Admissibility of the questions raised by the applicant and whether a ruling would be issued on Question No.5. - HELD THAT: - The Authority examined the scope of Section 97(2) and found Questions 1-4 fall within admissible categories under the provision, whereas Question 5 does not. Accordingly, no ruling could be given on Question No.5 because it did not fall within the scope of Section 97(2). [Paras 6, 7]Questions 1-4 were admissible and decided; no ruling issued on Question No.5 as it is not covered by Section 97(2).Final Conclusion: The Authority ruled that the applicant's hostel accommodation is not exempt as 'renting of residential dwelling for use as residence'; the applicant must register under GST if turnover exceeds the threshold; the services are classifiable under Heading 9963 and taxable at 9% CGST + 9% SGST; bundled in-house food forms a composite supply taxed at the rate of the principal supply (aggregate 18%); and no ruling was issued on the matter outside the scope of Section 97(2).

2023 (9) TMI 1645 - AUTHORITY FOR ADVANCE RULING, TAMIL NADU GST

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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.

Hostel accommodation services for students and working women don't qualify for GST exemption under Entry 12 of Notification 12/2017
Tamil Nadu AAR ruled that hostel accommodation services provided to students and working women do not qualify as "residential dwelling for use as residence" under GST exemption Entry 12 of Notification 12/2017. The applicant must register if turnover exceeds Rs. 20 lakh annually. Hostel accommodation services fall under tariff heading 9963, taxable at 18% GST (9% CGST + 9% SGST). When bundled with in-house food services, it constitutes composite supply taxed at the principal supply rate of 18%.

Rental of residential dwelling for use as residence - hostel accommodation not a residential dwelling - strict interpretation of exemption notifications - registration threshold under Section 22 - tariff heading 9963 (Accommodation, food and beverage services) - composite supply - principal supply determines tax treatmentRental of residential dwelling for use as residence - hostel accommodation not a residential dwelling - strict interpretation of exemption notifications - Whether the hostel accommodation supplied by the applicant is exempt as 'services by way of renting of residential dwelling for use as residence'. - HELD THAT: - The term 'residential dwelling' is not defined in the GST Act or the notification; past administrative guidance under service tax described it as residential accommodation excluding hotels, guest houses and other temporary-stay places. Renting of residential dwelling ordinarily denotes letting to a person or family to use the premises as a home without bundled amenities like food or housekeeping. The applicant's model-per bed charges, subdivision of a house, provision of bundled services (food, housekeeping, security), licensing and regulatory requirements specific to hostels, and commercial characteristics-demonstrates a conversion of premises into commercial hostel accommodation. Zoning permissions or licences do not alone impart residential character for exemption purposes. Exemption notifications must be strictly construed and ambiguity resolved against the claimant. Applying these principles, the Authority found the twin conditions of the exemption (a residential dwelling and use as residence) not satisfied and held hostel accommodation is not covered by the exemption entry. [Paras 7]Hostel accommodation supplied by the applicant is not eligible for exemption under the entry for 'renting of residential dwelling for use as residence'.Registration threshold under Section 22 - supply - Whether the applicant is required to obtain GST registration. - HELD THAT: - Since the accommodation services supplied by the applicant are taxable and constitute 'supply' in furtherance of business, the applicant is a supplier of services. Under the registration provision, a supplier of taxable services must register in the State if aggregate turnover in a financial year exceeds the prescribed threshold. Accordingly, registration is required if the applicant's aggregate turnover exceeds the notified limit. [Paras 7]The applicant must obtain GST registration in Tamil Nadu if aggregate turnover in a financial year exceeds the statutory threshold.Tariff heading 9963 (Accommodation, food and beverage services) - principal supply determines tax treatment - The tariff classification and applicable rate for the supply of hostel accommodation by the applicant. - HELD THAT: - Hostel accommodation services fall within the accommodation, food and beverage services group under tariff heading 9963. Hostels, being longer term, basic accommodation with minimal staff, are not equated to hotel accommodation. Under the rate notifications, such accommodation services fall under the residual entry for accommodation, food and beverage services not covered by other sub-items and are taxable at the rate specified for that residual category. [Paras 7]Supply of hostel accommodation is classified under tariff heading 9963 and is taxable at the rate prescribed for accommodation services under the residual entry.Composite supply - principal supply determines tax treatment - Whether in-house food supplied to hostel inmates is exempt as part of a composite exempt supply or taxable together with accommodation. - HELD THAT: - A composite supply exists where multiple taxable supplies are naturally bundled and one is the principal supply. The applicant provides accommodation with bundled ancillary services including food for a single consolidated charge. The principal supply is accommodation services; therefore, the tax rate applicable to the principal supply governs the composite supply. Given that the accommodation is taxable, the composite supply will attract the tax rate applicable to the principal supply. [Paras 7]In-house food supplied as part of bundled services is part of a composite supply whose tax rate is determined by the principal supply (accommodation).Whether a ruling can be issued on Question No.5 of the application. - HELD THAT: - The Authority examined admissibility and scope under the advance ruling provisions and determined that Question No.5 does not fall within the matters covered by the relevant provision for advance rulings. Consequently, no adjudicative ruling is given on that question. [Paras 6, 7]No ruling issued on Question No.5 as it does not fall within the scope of Section 97(2).Final Conclusion: The Authority ruled that the applicant's hostel accommodation is not exempt as renting of a 'residential dwelling for use as residence'; the applicant must register if turnover exceeds the prescribed threshold; the services classify under tariff heading 9963 and attract the rate applicable to the residual accommodation entry; in-house food forms part of a composite supply taxed according to the principal supply; and no ruling is issued on Question No.5 as it falls outside the advance ruling scope.

2023 (9) TMI 1642 - AUTHORITY FOR ADVANCE RULING, TAMIL NADU GST

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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."

Hostel accommodation services for students and working women don't qualify for GST exemption under residential dwelling provisions
AAR Tamil Nadu ruled that hostel accommodation services provided to students and working women do not qualify as "residential dwelling for use as residence" under GST exemption notifications. The accommodation constitutes taxable supply of services requiring GST registration if turnover exceeds twenty lakh rupees annually. Hostel services are taxable at 18% GST under tariff heading 9963 as composite supply, with accommodation being the principal service. The authority distinguished hostels from residential dwellings, noting hostels provide temporary accommodation with bundled services on per-bed basis rather than family residential use.

Services by way of renting of residential dwelling for use as residence - exemption notification to be interpreted strictly - residential dwelling - hostel accommodation versus hotel/commercial accommodation - composite supply - principal supply - registration requirement for supplier of taxable servicesServices by way of renting of residential dwelling for use as residence - residential dwelling - hostel accommodation versus hotel/commercial accommodation - exemption notification to be interpreted strictly - Hostel accommodation supplied by the applicant is not eligible for exemption under the notification exempting services by way of renting of residential dwelling for use as residence. - HELD THAT: - The Authority observed that 'residential dwelling' is not defined in the GST enactments but, as understood in trade parlance and prior administrative guidance, denotes accommodation used as a home. Hostels, which provide lodging to specific categories (students, workers) with per-bed charges, ancillary services (food, housekeeping) and regulatory licences specific to hostels, operate as commercial accommodation rather than letting of a residential dwelling used as a residence. Conversion of residential homes into hostel premises, provision of bundled services, absence of landlord-tenant attributes typical of letting to a family, and mandatory licences for hostels demonstrate that such premises lose the character of 'residential dwelling'. Exemption notifications must be strictly construed and the twin conditions of (i) renting of a residential dwelling and (ii) use as residence must both be satisfied; they are not met here. Reliance on differing authorities was noted but distinguished on facts or noted as sub judice. Consequently, the applicant's hostel accommodation does not fall within the exemption entry. [Paras 7]The services by way of providing hostel accommodation supplied by the applicant are not eligible for exemption under the cited exemption notifications.Registration requirement for supplier of taxable services - supply - The applicant is required to obtain GST registration if aggregate turnover in a financial year exceeds the threshold. - HELD THAT: - Having held that the hostel accommodation constitutes a taxable supply in the course or furtherance of business (and is not exempt), the Authority applied the registration threshold rule: every supplier of services making taxable supplies must register if aggregate turnover in a financial year exceeds the prescribed limit. The applicant therefore must register in Tamil Nadu if its aggregate turnover exceeds the statutory threshold. [Paras 7]The applicant is required to get registered in the State of Tamil Nadu if aggregate turnover in a financial year exceeds twenty lakh rupees.Tariff heading 9963 (Accommodation, food and beverage services) - hostel accommodation versus hotel/commercial accommodation - Hostel accommodation provided by the applicant falls under Tariff heading 9963 and is taxable at the rate applicable to 'Accommodation, food and beverage services' other than specified items, i.e., 9% CGST + 9% SGST. - HELD THAT: - The Authority distinguished hostels from hotel accommodation (temporary stays with extensive facilities) and concluded that hostel services are accommodation services classifiable under Heading 9963. Under the rate notification, accommodation, food and beverage services other than specified sub-items attract the specified rate; accordingly, hostel accommodation is taxable at 9% CGST plus 9% SGST. [Paras 7]The supply of services by way of providing hostel accommodation falls under Tariff heading 9963 and is taxable @ 9% CGST + 9% SGST.Composite supply - principal supply - The in-house food and other services supplied along with hostel accommodation constitute a composite supply and are taxable at the rate of the principal supply. - HELD THAT: - The Authority applied the statutory definition of composite supply: where two or more supplies are naturally bundled and one is the principal supply, the tax rate of the principal supply applies to the composite supply. The applicant provides accommodation together with ancillary services (food, housekeeping) for a consolidated consideration, and accommodation is the principal supply. Therefore the composite supply takes the tax rate of the principal supply (being the accommodation services taxable as above), resulting in the composite supply being taxable at the aggregate rate applicable to the principal supply. [Paras 7]The supply of in-house food and other services forms part of a composite supply whose tax rate is that of the principal supply (hostel accommodation), and accordingly the composite supply is taxable at that rate.Advance ruling admissibility - No advance ruling is issued on the applicant's fifth question as it does not fall within the scope of the advance ruling provisions invoked. - HELD THAT: - The Authority examined admissibility under the advance ruling provisions and concluded that the fifth question does not come within the scope of Section 97(2) of the Act; accordingly, no ruling was given on that question. [Paras 7]No ruling is issued for Question No. 5 as it falls outside the scope of Section 97(2).Final Conclusion: The Authority ruled that the applicant's hostel accommodation is not exempt as 'renting of residential dwelling for use as residence', the applicant must register if turnover exceeds the threshold, hostel services fall under Heading 9963 and are taxable at 9% CGST + 9% SGST, ancillary in-house food forms a composite supply taxed at the principal supply rate, and no ruling is issued on the applicant's fifth question as inadmissible.

2023 (9) TMI 1633 - AUTHORITY FOR ADVANCE RULING, TAMIL NADU GST

AI TextQuick Glance (AI)Headnote

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).

Hostel accommodation services to students and working women are taxable business supplies, not exempt residential dwellings under GST Entry 12
AAR Tamil Nadu ruled that hostel accommodation services provided to students and working women do not qualify as "residential dwelling for use as residence" under GST exemption Entry 12. The accommodation constitutes taxable business supply requiring registration if turnover exceeds Rs. 20 lakh annually. Services fall under tariff heading 9963, taxable at 18% GST (9% CGST + 9% SGST). In-house food supply forms composite supply with accommodation as principal service, attracting 18% tax rate on entire bundled service.

Services by way of renting of residential dwelling for use as residence - residential dwelling - interpretation of exemption notification - commercial premises / hostel as accommodation service - taxable supply - registration under Section 22 - tariff heading 9963 (Accommodation, food and beverage services) - composite supply - principal supply - rate of tax for accommodation servicesServices by way of renting of residential dwelling for use as residence - residential dwelling - interpretation of exemption notification - commercial premises / hostel as accommodation service - Whether the hostel accommodation provided by the applicant qualifies as 'residential dwelling for use as residence' and is exempt under the cited exemption notifications. - HELD THAT: - The Authority examined whether hostel accommodation falls within the meaning of 'residential dwelling for use as residence' in the exemption entry. Noting that 'residential dwelling' is not defined in the GST enactment, the Authority relied on prior administrative guidance under the erstwhile service tax regime and common understanding that a residential dwelling is a place treated as a home (with rooms such as kitchen, bedroom, living room) and ordinarily let to a family/person as a residence. The Authority found that the applicant's premises are operated as hostels: single rooms or beds let on a per-bed basis with bundled services (food, housekeeping, security), licences and certificates specific to running hostels are required, and the operation resembles a commercial accommodation business rather than a letting of a residential dwelling to a family. The Authority observed that conversion of residential homes into commercial hostels with ancillary services causes loss of the character of 'residential dwelling'. It rejected the applicant's reliance on various judicial decisions as factually distinct or not applicable to GST context, and reiterated that exemption notifications must be strictly construed, with the burden on the applicant to show that the supply falls within the exemption. Consequently, the Authority held that the twin conditions of the exemption-(i) being a 'residential dwelling' and (ii) being rented out 'for use as residence'-are not satisfied by the applicant's hostel services and therefore the services are not exempt under the cited notifications. [Paras 7]Hostel accommodation supplied by the applicant is not eligible for exemption under the cited exemption notifications.Taxable supply - registration under Section 22 - Whether the applicant is required to obtain GST registration. - HELD THAT: - Having held that the hostel services are not exempt and constitute a supply in the course or furtherance of business, the Authority treated the applicant as a supplier of taxable services. Applying the registration threshold, the Authority held that the applicant must obtain registration in the State of Tamil Nadu if its aggregate turnover in a financial year exceeds the prescribed threshold (twenty lakh rupees). [Paras 7]The applicant is required to register under the GST Acts if aggregate turnover in a financial year exceeds the threshold.Tariff heading 9963 (Accommodation, food and beverage services) - rate of tax for accommodation services - Tariff classification and rate applicable to the applicant's hostel accommodation services. - HELD THAT: - The Authority considered Notification No. 11/2017 and its amendments and noted the entries distinguishing hotel accommodation and other accommodation services. Observing that hostels are used for longer stays with basic facilities and are not equivalent to hotels, the Authority placed the applicant's hostel accommodation under Heading 9963 and specifically under the entry for 'Accommodation, food and beverage services other than (i)-(v)' (Sl. No. 7(vi) of the Notification). It held that the appropriate rate is 9% CGST + 9% SGST (i.e., 18% aggregate) as per that entry. [Paras 7]Hostel accommodation services fall under Tariff heading 9963 and are taxable at 9% CGST + 9% SGST under the relevant entry.Composite supply - principal supply - rate of tax for accommodation services - Whether in-house food supplied to hostel inmates is exempt as part of a composite exempt supply if hostel accommodation were exempt. - HELD THAT: - The Authority analysed the definition of 'composite supply' and the rule that tax on a composite supply is the tax of the principal supply. It found that the applicant provides accommodation together with ancillary services (food, housekeeping) for a consolidated charge and that accommodation is the principal supply. Since the Authority had held accommodation to be taxable (not exempt), the composite supply is taxable at the rate applicable to the principal supply. The Authority therefore concluded that in-house food supplied as part of the composite is taxable at the rate applicable to the accommodation principal supply. [Paras 7]In-house food supplied to inmates as part of a composite supply is taxable at the rate applicable to the principal supply (hostel accommodation).Final Conclusion: The Authority ruled that the applicant's hostel accommodation is not an exempt 'residential dwelling for use as residence'; the applicant must register if turnover exceeds the threshold; the services classify under Heading 9963 and are taxable at 9% CGST + 9% SGST; and in-house food supplied as part of the composite supply is taxable at the rate of the principal supply. No ruling was issued on the matter falling outside Section 97(2).

2023 (9) TMI 1632 - AUTHORITY FOR ADVANCE RULING, TAMIL NADU GST

AI TextQuick Glance (AI)Headnote

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).

AAR rules hostel accommodation for students and working women doesn't qualify for GST residential dwelling exemption, taxable at 18%
AAR Tamil Nadu ruled that hostel accommodation services provided to students and working women do not qualify as "residential dwelling for use as residence" under GST exemption notifications. The accommodation constitutes taxable supply requiring registration if turnover exceeds twenty lakh rupees annually. Hostel services are classified under tariff heading 9963, taxable at 18% GST (9% CGST + 9% SGST). Food and other services provided constitute composite supply with accommodation as principal supply, attracting 18% tax rate on entire bundle.

Renting of residential dwelling for use as residence - composite supply - principal supply determining tax on bundled services - strict interpretation of exemption notifications - registration liability under Section 22 of the CGST Act - classification and rate under Tariff heading 9963Renting of residential dwelling for use as residence - strict interpretation of exemption notifications - Whether the hostel accommodation supplied by the applicant is eligible for exemption under Entry 12 of Notification No. 12/2017-Central Tax (Rate) and the identical entries under the integrated and State notifications. - HELD THAT: - The expression 'residential dwelling' is not defined in the Act or notification and must be understood in ordinary trade parlance as accommodation treated as a home. Renting of residential dwelling ordinarily involves letting to a single person/family for use as a home and typically excludes bundled amenities like food and housekeeping. The applicant's premises are let on a per-bed basis to multiple inmates, with consolidated charges and ancillary services, and are regulated/licenced as hostels under specific legislation and municipal/regulatory regimes. Those regulatory and functional indicia show conversion of residential homes into commercial/public hostel premises. Exemption notifications are to be construed strictly and the twin conditions of the entry - (i) renting of a 'residential dwelling' and (ii) use as 'residence' - must both be satisfied. On the facts and regulatory matrix, the accommodation provided by the applicant does not qualify as a 'residential dwelling for use as residence' and therefore the exemption is not available. [Paras 7]Hostel accommodation supplied by the applicant is not eligible for exemption under Entry 12 of Notification No.12/2017-CT (Rate) and the corresponding integrated and State notifications.Registration liability under Section 22 of the CGST Act - supply in furtherance of business - Whether the applicant is required to obtain GST registration. - HELD THAT: - Having held that the hostel accommodation is not an exempt supply, the arrangement between the applicant and inmates constitutes supply in the course or furtherance of business. A supplier of taxable services is required to register under the GST enactments if aggregate turnover in a financial year exceeds the prescribed threshold. Accordingly, the applicant must obtain registration in Tamil Nadu if its aggregate turnover exceeds twenty lakh rupees in a financial year. [Paras 7]The applicant is required to register under the GST Acts in Tamil Nadu if aggregate turnover in a financial year exceeds twenty lakh rupees.Classification and rate under Tariff heading 9963 - taxability of hostel accommodation - Tariff classification and rate applicable to the supply of hostel accommodation by the applicant. - HELD THAT: - Hostel services are distinguishable from hotel accommodation and are not to be equated with hotels for the purpose of applying hotel rates. Hostels provide longer-term, basic accommodation with minimal staff and facilities and therefore fall within the residual description under Heading 9963. On this basis, the supply of hostel accommodation services by the applicant is classifiable under Tariff heading 9963 and taxable under the specified entry for accommodation, food and beverage services other than the specified sub-items. The authority holds the applicable rate is 9% CGST + 9% SGST under Sl. No. 7(vi) of Notification No.11/2017 Central Tax (Rate), as amended. [Paras 7]Hostel accommodation falls under Tariff heading 9963 and is taxable at 9% CGST + 9% SGST under the relevant entry of Notification No.11/2017 (as amended).Composite supply - principal supply determining tax on bundled services - Whether in-house food supplied to inmates is exempt if accommodation were exempt, and the tax treatment of the bundled services actually provided. - HELD THAT: - The services supplied by the applicant comprise multiple services (accommodation, food and other ancillary services) provided together for a consolidated charge and therefore constitute a 'composite supply' where one is the principal supply. The principal supply is the accommodation service. For composite supplies the tax rate of the principal supply governs the entire composite supply. Since the accommodation service is taxable (not exempt) and is the principal supply, the tax rate applicable to the composite supply is the rate applicable to the principal supply. [Paras 7]In-house food and ancillary services supplied in a consolidated manner are part of a composite supply; the tax rate of the principal supply (hostel accommodation) governs the composite supply.Final Conclusion: The Authority ruled that the applicant's hostel accommodation does not qualify for exemption as 'renting of residential dwelling for use as residence'; the applicant must register if turnover exceeds the threshold; hostel accommodation is classifiable under Heading 9963 and taxable at 9% CGST + 9% SGST; where services (including food) are supplied as a composite bundle, the tax of the principal supply applies. No ruling was issued on the fifth question as it fell outside Section 97(2).

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AAR rules hostel accommodation for students and working women doesn't qualify for GST residential dwelling exemption, taxable at 18%

AAR Tamil Nadu ruled that hostel accommodation services provided to students and working women do not qualify as "residential dwelling for use as residence" under GST exemption notifications. The accommodation constitutes taxable supply requiring registration if turnover exceeds twenty lakh rupees annually. Hostel services are classified under tariff heading 9963, taxable at 18% GST (9% CGST + 9% SGST). Food and other services provided constitute composite supply with accommodation as principal supply, attracting 18% tax rate on entire bundle.