{"id":261793,"date":"2022-02-15T16:00:37","date_gmt":"2022-02-15T10:30:37","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=261793"},"modified":"2022-02-25T10:03:20","modified_gmt":"2022-02-25T04:33:20","slug":"whether-gst-exemption-can-be-claimed-for-leasing-out-residential-premises-as-hostel-to-students-and-working-professionals","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/02\/15\/whether-gst-exemption-can-be-claimed-for-leasing-out-residential-premises-as-hostel-to-students-and-working-professionals\/","title":{"rendered":"Whether GST exemption can be claimed for leasing out residential premises as hostel to students and working professionals? Kar HC answers"},"content":{"rendered":"

Karnataka High Court: <\/strong>The Division Bench of Alok Aradhe and M.I. Arun, JJ., addressed whether GST exemption can be claimed for leasing of residential premises as a hostel to students and working professionals.<\/p>\n

A petition was filed raising the question, whether the service provided by the petitioner i.e., leasing of residential premises as hostel to students and working professionals is covered under Entry 13 of Notification No. 9\/2017 namely \u2018service by way of renting of residential dwelling for use as residence\u2019 issued under Integrated Goods and Services Tax Act, 2017.<\/p>\n

Factual Trajectory<\/span><\/h4>\n

The petitioner along with other co-owners executed a lease deed in favour of the lessee. The residential property was leased out as Hostel for providing long term accommodation to the students and working professionals with the duration of stay ranging from 3 months to 12 months.<\/p>\n

The petitioner with a view to seek clarification with regard to his eligibility to seek exemption on the rent received by him from the lessee by letting the property filed an Advance Ruling application.<\/p>\n

Further, the AAR held that benefit of exemption notification was not available to the petitioner.<\/p>\n

On being aggrieved with the above order, the petitioner filed an appeal before the Appellate Authority for Advance Ruling, Karnataka (AAAR Karnataka), which held that the property rented out by the petitioner was a hostel building which was more akin to sociable accommodation rather than what was commonly understood as residential accommodation.<\/p>\n

Hence the said property could not be termed as a residential dwelling. Adding to this, the Court stated that the benefit of exemption notification is available only if the residential dwelling is used as a residence by the person who has taken the same on rent \/ lease.<\/em><\/p>\n

Analysis, Law and Decision<\/span><\/h4>\n

Entry 13 in the said exemption notification provided for exemption from payment of Integrated Goods and Service Tax in respect of \u2018services by way of renting of residential dwelling by way of use as residence\u2019.<\/p>\n

In view of the above, the burden is on the petitioner to show that his case comes within the parameters of the exemption notification.<\/p>\n

Elaborating further, the Bench referred to the decision of Supreme Court in Kishore Chandra Singh v. Babu Ganesh Prasad Bhagat<\/em>, AIR 1954 SC 316<\/a>, wherein it was held that the expression residence only connotes that a person eats, drinks and sleeps at that place and it is not necessary that he should own it.<\/p>\n

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\u201cThe hostel is used by the students for the purposes of residence. The students use the hostel for sleeping, eating and for the purpose of studies for a period ranging between 3 months to 12 months. In the hostels, the duration of stay is more as compared to hotel in guest house, club etc.\u201d<\/span><\/p>\n<\/blockquote>\n

In Court\u2019s opinion, the expression \u2018residence\u2019 and \u2018dwelling\u2019 have more or less the connotation in common parlance and therefore, no different meaning can be assigned to the expression \u2018residential dwelling\u2019 and it cannot be held that the same does not include hostel which is used for residential purposes by students or working women.<\/p>\n

Questions to be considered in order to ascertain whether the service provided by the petitioner was covered under the exemption notification:<\/p>\n