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.

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Issues Involved:
1. GST Exemption for Hostel Services: Whether hostel and residential accommodation services provided by the petitioners are eligible for GST exemption under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate).
2. Requirement of GST Registration: Whether the petitioners are required to register under GST if their aggregate turnover exceeds twenty lakh rupees.
3. Applicable Tariff for Hostel Services: Determination of the specific tariff entry applicable to hostel services.
4. Composite Supply of In-House Food: Whether the incidental supply of in-house food to hostel inmates is exempt as part of a composite supply.
5. Applicability of Karnataka High Court Judgment: Whether the judgment of the Karnataka High Court in "Taghar Vasudeva Ambrish vs. Appellate Authority for Advanced Ruling" is applicable to the petitioners' case.

Summary:

1. GST Exemption for Hostel Services:
The petitioners argued that their services of providing residential accommodation to girl students and working women should be exempt from GST under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate). The Tamil Nadu State Appellate Authority for Advance Ruling ruled that these services do not qualify for the exemption. The High Court, however, held that "the 'hostel services' provided by the petitioners would squarely fall within the purview of Entry No.12 of Exemption Notification No.12 of 2017," thereby qualifying for GST exemption.

2. Requirement of GST Registration:
The Tamil Nadu State Appellate Authority for Advance Ruling stated that the petitioners are required to register for GST if their aggregate turnover exceeds twenty lakh rupees. The High Court did not specifically overturn this requirement but focused on the exemption aspect.

3. Applicable Tariff for Hostel Services:
The ruling authority categorized the supply of hostel services under Tariff heading 9963, taxable at 9% CGST + 9% SGST. The High Court did not specifically address this tariff classification but emphasized the exemption under Entry 12.

4. Composite Supply of In-House Food:
The authority ruled that the supply of in-house food to hostel inmates is part of a composite supply, taxable at 18%. The High Court's focus was on the primary service of providing residential accommodation, which it ruled as exempt.

5. Applicability of Karnataka High Court Judgment:
The petitioners cited the Karnataka High Court's judgment in "Taghar Vasudeva Ambrish vs. Appellate Authority for Advanced Ruling," which held that hostel services are exempt from GST. The High Court of Madras found this judgment applicable and binding, stating that "the law laid down by the Hon'ble Karnataka High Court binds the 2nd respondent also."

Conclusion:
The High Court allowed the writ petitions, setting aside the impugned orders of the Tamil Nadu State Appellate Authority for Advance Ruling. The court ruled that the hostel services provided by the petitioners qualify as "residential dwelling for use as residence" and are thus exempt from GST under Entry No.12 of Exemption Notification No.12 of 2017. The court emphasized that the exemption should be viewed from the perspective of the service recipient and not the provider.

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