No GST on Rental of Apartment Buildings as Hostel, Says Hc | Bangalore News

BENGALURU: The rental of residential premises as a hostel to students and professionals is exempt from Goods and Services Tax (GST), the Karnataka High Court has ruled.
In a recent judgement, the court said the letting of residential premises as a hostel was “covered by entry 13 of the exemption notice dated 28 September 2017 issued under the the integrated goods and services tax (IGST)”. Taghar Venkatadri Ambarish, the petitioner and co-owner with other co-owners, had signed a deed of lease in favor of D Twelve Spaces (the tenant) on June 21, 2019.
The tenant leased the six-story property with 42 rooms as a hostel to provide long-term accommodation for students and working professionals with lengths of stay ranging from 3 months to 12 months.
The petitioner had challenged the 31st August 2020 order of the Advance Ruling Appeal Authority, Karnataka (AAAR Karnataka) finding that the property is a hostel building looked more like social housing than housing.
In addition, AAAR Karnataka had found that the rented property could not qualify as “residential accommodation” and the benefit of the exemption notification is only available if the residential accommodation is used as a residence by the person who has it. taken on hire/lease, reiterating an earlier finding made by the Karnataka Advance Ruling Authority on March 23, 2020.
However, the bench of the High Court Division headed by Justice Alok Aradhe, authorizing the petition filed by Ambarish, observed: residential accommodation as same is used by students and working women for residence purposes. Second, residential accommodation is used for residential purposes. Thus, the above questions are answered in favor of the petitioner.”
It should be noted, adds the judiciary, that the notification does not oblige the lessee to use the premises as a dwelling. Therefore, the benefit of the exemption notification cannot be refused to the applicant on the grounds that the lessee does not use the premises.
The petitioner had claimed that the accommodation was categorized as residential in the Bangalore City Revised Master Plan 2015 and added that the exemption notice did not require the tenant to use the premises as a residence.

Linda G. Ibarra