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.

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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.

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