Leasing residential premises as hostel to students qualifies for GST exemption under Entry 13 of Notification 9/2017

Karnataka HC held that leasing residential premises as hostel to students and working professionals qualifies for GST exemption under Entry 13 of Notification No.9/2017. The court applied statutory interpretation principles, noting that "residential dwelling" should be understood in popular sense. Relying on pre-GST service tax guidance defining residential dwelling as accommodation different from temporary stay facilities like hotels, the court concluded hostels for students and working professionals constitute residential dwellings. The petitioner successfully established entitlement to the exemption, with petition allowed.

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Issues: Whether leasing of residential premises used as a hostel for students and working professionals falls within Entry 13 of Notification No. 9/2017-Integrated Tax (Rate), namely services by way of renting of residential dwelling for use as residence.

Analysis: Entry 13 grants exemption only to renting of a residential dwelling used as a residence, and exemption notifications are to be construed strictly with the burden on the claimant to show that the case falls within the exemption. The expression "residential dwelling" is not defined in the statute and must be understood in its common parlance sense. On that basis, residential accommodation used for long-term stay, including a hostel occupied by students and working professionals for sleeping, eating and residence, answers that description. The notification does not require that the lessee itself must occupy the premises personally as a residence. Trade licence particulars or commercial registration of the lessee were held to be irrelevant to the exemption issue.

Conclusion: The hostel accommodation is covered by Entry 13 and the exemption under the notification is available to the petitioner.

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