TaxTMI 
TaxTMI 
2025 (11) TMI 848
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....783, 13799, 13804, 13790, 13806, 13809, 13822, 13829, 13832, 13815, 13824, 14192, 27220, 30257, 30260, 30251, 30253, 30255, 35063 & 35068 of 2025 - -<br>Indian Laws<br>Hon'ble Mr. Justice Krishnan Ramasamy For the Petitioner in all petitions : Ms.Aparna Nandakumar, in WP.Nos.10194, 4552, 4481, 4472, 4477, 11033, 11035, 11038, 12224, 12235, 12230, 12238, 12243, 12251, 12253, 12245, 12249, 12255, 12604, 31337 & 31342 of 2025 Mr.T.Saikrishnan, in WP.Nos.12221 of 2025 Mr.S.Senthil in WP.Nos.26937, 26939, 26941, 26942, 26944 & 26951 of 2025 Mr.N.K.Ponraj, in WP.Nos.7619 of 2025 Mr.Kingston Jerold, in WP.No.24189 of 2025 For the Respondent in all petitions : Mr.P.Prithvi Chopda, St.counsel in WP.No.10194 of 2025 Mr.D.Ferdinand, St.counsel in WP.Nos.4552, 4481, 4472, 4477, 26937, 26939, 26941, 26942, 26944 & 26951 of 2025 Mr.K.N.Umapathy, St.counsel in WP.No.7619 of 2025 Mr.Najeeb Usman Khan, St.counsel in WP.Nos.11033, 11035, 11038/2025 Mr.N.Velmurugan, St.counsel, in WP.Nos.12221, 12224, 12235, 12230, 12238, 12243, 12251, 12253, 12245, 12249, 12255 of 2025 Mrs.V.Vijayalakshmi, in WP.Nos.12604 of 2025 & WP.No.24189 of 2025 for R2 to 4 Mr.D.R.Arunkumar, St.counsel in WP.Nos.3133....
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....nancial constraints, the inmates used to stay in those hostels by sharing their rooms with other inmates with an intention to reduce the cost of living. 2.6 The above aspects have not been taken into consideration by the respondents while levying the property tax and water tax under the commercial tariff. In the event, if it is levied in commercial tariff, the petitioners will pay the said property tax and water tax as per the revised/enhanced rate and subsequently, the same will be pass on to the inmates. There is no dispute on this aspect. 2.7 On the other hand, if the hostel property is treated as "residential unit" and residential tariff is levied by the respondents, ultimately, the beneficiary would none other than the recipient of the service, i.e., inmates of the respective hostels. Therefore, while levying the tax against property, the respondent is supposed to have considered the nature of usage of the said property by the recipient of service. However, in these cases, no indulgence have been given by the respondent before converting the tariff from "residential" to "commercial" and also no prior intimation was provided to the petitioner with regard to the said conve....
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....(hereinafter called as "1998 Act"), before the Taxation Appeals Committee. However, without filing any such appeal, now, the petitioners had approached this Court by way of these petitions. 3.3 By referring the Regulation 4(ii) of CMWSS Service Charges (Levy and Collection) Regulations, 1998, they would submit that the petitioners' properties are classified as "commercial premises". In this regard, they had also referred to the definition of the word "hostel" or "lodging house" as provided in Section 2(e) of the Tamil Nadu Hostels and Homes for Women and Children (Regulation) Act, 2014 and would submit that the petitioners' premises leans towards the commercial classification for the purpose of levying property tax as per the above provisions. Hence, they would contend that the said premises were rightly considered as "commercial premises" by Corporation, CMWSSB and TANGEDCO, while imposing the property tax, water tax and electricity charges. 3.4 It was also submitted that if the contentions of the petitioners are accepted and the impugned demand notices are quashed by treating the petitioners' premises as residential unit, the respective Corporations, CMWSSB and ....
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.... charges, either under the commercial tariff or under residential tariff, the same would be passed on against the recipient of service. Thus, the burden of paying those taxes would ultimately rest with the recipient of services, i.e., inmates of the hostel rooms. 6.5 In these cases, the hostel rooms are rented out by the petitioners for working men and women, those who are utilising the same as their residence/accommodation after their avocation. In such scenario, whether it would be appropriate for the respondents to classify the said hostel rooms as commercial units and levy the taxes under commercial tariff. 6.6 Normally, to classify a property as "commercial unit", the said property should have been put into use for any commercial activities. For example, if a person is the owner of an apartment with 10 flats, out of which, 6 apartments were rented out for residential purpose and 4 apartments were rented out for commercial purpose, then the said 6 apartments shall be consider as "residential units", for which the residential tariff will be applied for the purpose of levying property tax and water tax, etc., whereas, for the remaining 4 apartments, which are used for comme....
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....h comes under residential usage. Therefore, as stated above, different yardsticks cannot be applied for the hostel owners and the apartment owners, since the nature of activities carried on at both the premises are one and the same. 6.11 If the contention of the respondents is accepted and different yardsticks are applied, then it would be a clear discrimination against the poor people. In other words, applying different yardsticks would result in charging twice the amount towards property tax, water tax, water charges and electricity charges for the inmates of the hostel under the pretext of classifying the hostels as commercial units. Even for the usage of water for their personal activities, such as taking bath, washing out the toilets, they are compelled to pay high rate of tax when compared to the people, who can afford to live in individual houses/apartments/bungalow, etc. 6.12 The said discrimination violates the Articles 14 and 19(1)(8) of the Constitution of India. The intention of our Legislation is not to squeeze the poor by way of imposing high rate of tax under commercial tariff and pass on the benefits to the rich by imposing low rate of tax under residential ta....
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.... cease to reside in any such house or hut merely because he is absent from it or has elsewhere another dwelling in which he resides, if he is an liberty to return to such house or hut at any time and has not abandoned his intention of returning ; Tamil Nadu Urban Local Bodies Act, 1998 2(34) "residence"- "reside" a person is deemed to have his "residence" or to "reside" in any house or hut if he sometimes use any portion thereof as a sleeping apartment, and a person is not deemed to cease to reside in any such house or hut merely because he is absent from it or has elsewhere another dwelling in which he resides, if he is at liberty to return to such house or hut at any time and has not abandoned his intention of returning ; 6.15 A reading of the above would show that the word "residence" has been defined in a similar fashion in all the three Acts. As per the said definition, even in a house or a hut, if a person uses any portion thereof as a sleeping apartment, it will not lose its status as "residence", due to his absence or since he is having another dwelling unit, in which he resides, if he is at liberty to return to such house at any time and has not abandoned hi....
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.... As long as the hostels, including private hostels, are used for residential purpose by the inmates, it would only fall under the category of Regulation 7 instead of 4(ii). In these cases, all the recipient of service of the petitioners, i.e., inmates of the hostel rooms, have been using the hostel only for the purpose of residential activities. In such case, the petitioners' hostel will come under the category of Regulation 7, i.e., Domestic Residential Premises and thus, the application of Regulation 4(ii) will not come into picture. 6.21 That apart, the definition of the word "hostel" or "lodging house" as provided in Section 2(e) of the Tamil Nadu Hostels and Homes for Women and Children (Regulation) Act, 2014, was also referred by the respondents. The said definition is extracted hereunder: 2(e) "hostel" or "lodging house" means a building in which accommodation is provided for women or children or both, either with boarding or not; 6.22 The aforesaid Act is a special Act enacted in order to protect the interest of women and children. Therefore, the above definition has to be looked into from that perspective alone and the same will not be applicable for the....
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....pondents to substantiate that the prior communication has been sent to the petitioners with regard to the levying of property tax based on the commercial tariff or about the conversion of the petitioners' property from residential tariff into commercial tariff. In the absence any documentary evidences, it is clear that all the impugned demand notices were issued in violation of principles of natural justice, i.e., without providing any opportunity to the petitioners to explain their case. 7.4 In view of the above, 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. Accordingly, the 2nd issue is also answered. 8. When a similar issue arise in GST Matter, the same petitioners filed a ba....
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....when the same is used for residence. Meaning thereby, GST was payable in the case of renting of a residential dwelling to any person when the same is used for the commercial purpose. 35. Later, vide notification no. 04/2022- Central Tax (Rate) dated 13th July 2022, said Sl. No. 12 of notification no. 12/2017-Central Tax (Rate) dated 28th June 2017 was amended. According to the amendment, after the words 'as residence', the words 'except where the residential dwelling is rented to the registered person' has been added. Hence, post issuance of notification no. 04/2022- Central Tax (Rate) dated 13th July 2022, Sl. No. 12 as effective from 18th July 2022 will read as under - Heading Description of service Rate Condition Heading 9963/Heading99721 Services by way of renting of the residential dwelling for the use as a residence except where the residential dwelling is being rented to the registered person NIL NIL 36. Hence, with effect from 18th July 2022, GST applicability on renting of residential dwelling will be as follows: Particulars GST position post 18th July 2022 Renting of residential dwelling for residential purpose to the per....
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.... Is the hostel, provided by the Trust to students, will be covered within the definition of Charitable Activities and thus, exempted as per the Exemption Notification No.12 of 2017, for which they have provided the clarification as follows: The hostel accommodation services do not fall within the ambit of Charitable Activities as defined in paragraph No.2(r) of the Exemption Notification No.12 of 2017. However the services provided by way of hotel, motel, inn, guest house, camp site, lodge, house boat, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempted. Thus, accommodation service in hostels, including trust, having declared tariff below one thousand rupees per day is also exempted. 40. By referring the above, the 2nd respondent came to the conclusion that the hostel service will not fall under the exempted category of Entry No.12 of Exemption Notification No.12 of 2017. In the Entry No.12 of Exemption Notification No.12 of 2017, it has been mentioned about services provided by way of renting of residential dwelling for use as residenc....
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....cause the hostel owners charge some amount from the students, such accommodation cannot be treated as commercial or non residential. iv) Karnataka High Court in "Taghar Vasudeva Ambrish versus Appellate Authority for Advanced Rulings, Karnataka and Others" (W.P.No.14981/2020, dated 7.2.2022), wherein, it has been observed as under: "Thus, it is evident that the expression 'residence and 'dwelling' have more or less the connotation in common parlance and therefore, no different meaning can be assigned to the expression 'residential dwelling' as it cannot be held that the same does not include hostel which used for residential purposes by students or working women". While observing so, the Karnataka High Court has ultimately held that the service provided by the petitioner therein, i.e. leasing out residential premises as hostel to students and working professionals is covered under Entry 13 of Notification No.9/2017 dated 28.09.2017, namely, services by way of renting of residential dwelling for use as residence issued under the Act and the petitioner is held entitled to benefit of exemption notification. 43. In other words, th....
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.... also to be used for sleeping, eating, studies etc. temporarily if not permanently day to day, it cannot be described as "non-residential" use within the meaning of Section 25 of the Act. Accordingly, if the suit premises were to be used as students hostel, then surely it would be for the residential purpose of the students of the College run by the respondent trust. In that case also, the respondent trust would be entitled to claim possession of the suit premises for the requirement of the trust. If this be so, there is no force in the argument pressed into service that no decree could be passed as the nature of requirement would be prohibited by Section 25 of the Act." 45. It is well settled that when the word is not defined in the Act itself, it is permissible to refer to the Dictionaries to find out the general sense in which the word is understood in common parlance. 46. Therefore, it may also be referred to the meaning of the expression 'residence' and 'dwelling' as defined in Concise Oxford English Dictionary 2013 Edition as well as Blacks Law Dictionary 6th Edition to ascertain its meaning in common parlance and in popular sense which read as under: ....
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....ingle family resides, is subdivided and let out to different persons and rent being collected on per bed basis with bundle of other services against a consideration clearly constitutes a business of supplying accommodation services along with ancillary services and thus on this count, the hostel accommodation does not qualify as a residential dwelling and the question of using the same as residence does not arise; iii) that though the accommodation and residence seems to be synonymous, there is subtle difference between the two and the hostels are nothing but accommodation which provide temporary lodging to the inmates by converting a residential dwelling into a hotel and providing hotel service, which eventually makes the same dwelling non-residential' and taxable and in the instant case, the residential homes have been converted into a commercial purpose and thereby losing its status as 'residence dwelling'; iv) that in order to run hostel the license from Shop and establishment Act is required and it is not required for residence dwelling for use as residence.. Shops and establishment license are required for commercial establishment. Hence hostels ....
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....d the same is liable to be set aside. 52. In the present case, it is not in dispute that the inmates of the respective hostels run by the petitioners are the girl students and the working women who are not registered persons and using the premises as their residence, for which, they are paying fee, which can be termed as rent and it is not the case of the respondents that the inmates are carrying on any commercial activities in the rented premises or using the same for commercial purpose. That apart, the inmates of the room also using the common kitchen and sharing the foods as their own. Admittedly, GST is not applicable if a residential property is rented out to any persons in their personal capacity and for use as their own residence. In other words, if a residential property is rented out, that too for residential purpose, then the rental income derived from such property does not attract GST. However, if a person rents out any immovable property for doing business purposes, it would attract GST at a rate of 18%. Assuming for a moment that a landlord owns a building consisting of two rooms and a kitchen and attached bathrooms and if he gives it to a family consisting o....
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....ature of residential dwelling will vary. Merely because the persons are staying in hostel rooms due to their financial condition, the same will not take away the status of the said hostel room as residential dwelling for the inmates of the room, because after their avocation, they have been staying, sleeping, eating, washing, etc in the hostel rooms alone. 55. As per the 2nd respondent's perspective, a working woman, who is drawing the salary of around a sum of Rs.15,000/- to Rs.20,000/- and paying hostel rent for around a sum of Rs.6,000/- will not be exempted from GST, whereas a Manager, who is working in a same office and can afford to pay around a sum of Rs.30,000/- to Rs.50,000/- as rent will be exempted from GST by citing the reason that the hostel accommodation would fall within the purview of GST. However, it is not the intention of the Legislature to tax the poor people. The meaning of "residential dwelling" mentioned in the Entry No.12 of Exemption Notification No.12 of 2017 would cover both the poor and rich people. 56. Ultimately, the Authorities have to look into the aspect as to whether the particular place is a dwelling unit or not. When such be....
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....) of the Table below from so much of the Integrated Tax leviable thereon under Sub-Section (1) of Section 5 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified in the corresponding entry in column (5) of the said Table, namely:- Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent) Condition (1) (2) (3) (4) (5) 13 Heading 9963 or Heading 9972 Services by way of renting of residential dwelling for use as residence Nil Nil LEGAL PRINCIPLES: 10. The issue with regard to interpretation of exemption notification is no longer res integra and the Constitution Bench of the Supreme Court in 'DILIP KUMAR AND COMPANY AND OTHERS while dealing with the reference pertaining to interpretation of an exemption notification, has answered the reference in the following terms: 66.1 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 ....
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....of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest house, camp - site, lodge, house boat, or like places meant for temporary stay. Thus in the aforesaid education guide issued by Central Board of Indirect Taxes and Customs which contains clarifications, it is provided that in normal trade parlance residential dwelling means any residential accommodation and is different from hotel, motel, inn, guest house etc. which is meant for temporary stay. The aforesaid clarification which is issued by the Board, in the absence of anything to the contrary in the Act, binds the Respondent. 13. It is noteworthy that the accommodation which is used for the purposes of the hostel of students and working women is classified in residential category in the Revised Master Plan 2015 of Bangalore City. The Supreme Court in KISHORE CHANDRA SINGH VS BABU GANESH PRASAD BHAGAT AIR 1954 SC 316 has held that expression residence only connotes that a person eats, drinks and sleeps at that place and it is not necessary that he should own it. The aforesaid decision was referred to by Bombay High Court in BANDU RAVJI NIKAM....
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....used for. Firstly, the residential dwelling is being rented, as the hostel to the students and working women fall within the purview of residential dwelling as the same is used by the students as well as the working women for the purposes of residence. Secondly, the residential dwelling is being used for the purposes of residence. Thus, the aforesaid questions are required to answered in favour of the petitioner. It is also worth mentioning that the notification does not require the lessee itself use the premises as residence. Therefore, the benefit of exemption notification cannot be denied to the petitioner on the ground that the lessee is not using the premises. Similarly, the finding recorded by AAAR Karnataka that the hostel accommodation is more akin to 'sociable accommodation' is unintelligible and is not relevant for the purposes of determining the eligibility of the petitioner to claim the benefit under the exemption notification. 16. So far as the submission that the petitioner is registered as commercial establishment under the Karnataka Shops and Commercial Establishment Act, 1961 or that a trade licence has been issued by BBMP, suffice it to say that i....
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....nt Notification is only to give exemption towards the services which are in residential nature and not towards commercial nature and the premises should be of residential dwelling for use as residence. The purpose of exemption given in the Notification is only to lessen the burden of tax on the dwellers, who are the tenants/occupants of the residential premises taken on rent. 62. In the present case, the imposition of GST on the Hostel accommodation should be viewed from the perspective of the recipient of service and not from the perspective of service provider. However, the 2nd respondent has dealt with the entire issue as if GST is going to be imposed on the revenue of the service provider and he is going to pay the same from and out of his pocket. On the other hand, the imposition of GST is only on the recipient of service and the GST is going to be collected only from the recipient of the service and not from the service provider. As far as service provider is concerned, he is collecting the GST from the recipient of the service and making deposit with the Central Government. 63. While adverting to the imposition of GST on hostel accommodation, it has to be l....