Hostel services provided for residential purposes qualify for GST exemption under relevant notifications, emphasizing the interpretation of exemption notifications should favor the taxpayer.

JUDGMENT :

(Prayer: Writ Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorari, to call for the records pertaining to the impugned order passed by the second respondent in Advance Ruling No.45/AAR/2023 dated 31.08.2023 and quash the same.)

1. Since the facts and circumstances are similar and also as common issues are involved in these Writ Petitions, they are taken up together and being disposed of vide this common order.

2. The petitioners herein, having obtained licence, are running private ladies hostels by providing residential accommodation and food to the college students and working women on monthly basis with reasonable tariffs. According to the petitioners, they are carrying on ladies hostels with a philanthropic motive and purpose for providing safe and secure environment for the student girls and working women who hail from far away places and remote villages and who are not in a position to secure independent residential accommodation by paying huge rents and advance in the city. The monthly tariff per student or per inmate ranges between Rs.1200/- to 6,500/- per month.

3. While so, under the Goods and Service Tax regime after the introduction of the Central Goods and Services Tax Act, 2017 (in short, 'GST Act') and the Tamil Nadu Goods and Services Tax Act, 2017 (in short, 'TNGST Act') and the Integrated Goods and Services Tax Act, 2017 (in short, 'IGST Act'), the Central Government has issued exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, wherein certain categories of exempt services were notified. Consequently, an identical Notification was issued under TNGST Act. Similarly by virtue of powers conferred under Section 6(1) of the IGST Act, exemption Notification 9/2017-Integrated Tax-Rate, 2017 was issued by the Central Government.

4. Under the Exemption Notification above mentioned, Entry No.12 of the Exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 (similar entry, vide Entry No.13 of Exemption Notification No.9/2017-Integrated Tax Rate dated 28.06.2017) reads as follows:

5. By referring to the above, the petitioners herein would claim that since they are providing the residential accommodation to the girl students and working women, which can be termed as 'residential dwelling' used as residence by the inmates of the hostels and thereby, the charges/rent/tariff collected by them from the inmates on such accommodation, qualifies for GST exemption and therefore, they are entitled to the exemption from levy of GST tax.

6. Accordingly, claiming exemption, the petitioners moved applications before the Tamil Nadu State Appellate Authority for Advance Ruling/2nd respondent herein, under Section 97 of CGST Act in Form GSTARA-01, seeking for a ruling on the following questions:

“(a) Whether the hostel and residential accommodation extended by the the Applicant hostel would be eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 dated 28.06.2017 and under the identical Notification under the TNGST Act, 2017 and also under Entry 13 of Exemption Notification No.9/2013- Integrated Tax-Rate dated 28.06.2017 as amended?

(b) Whether the Applicant hostel being eligible for exemption under Sl. No. 12 of Notification-12/2017 (CT Rate) dated 28.06.2017 as amended would at all be required to take registration under the GST Enactments by virtue of the Exemption Notifications as afore mentioned and also under the provisions of Section 23 of the CGST/TNGST Act 2017?

(c) Whether any specific tariff entry is applicable to hostels under the Tariff Notification, in the event of requirement of registration?

(d) Whether, in the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply?

(e) Whether the judgment of the Division Bench of the Hon'ble Karnataka