DTD.31.8.2020

PASSED

BY

R-1

ANNEXURE-Q.

THIS W.P. HAVING BEEN HEARD AND RESERVED FOR

ORDERS ON 03.02.2022, COMING ON FOR PRONOUNCEMENT OF

ORDERS THIS DAY, ALOK ARADHE J., MADE THE FOLLOWING:

ORDER

In this writ petition, the solitary question which arises

for consideration is whether the service provided by

petitioner i.e., leasing of 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'

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issued under Integrated Goods and Services Tax Act, 2017

(hereinafter referred to as 'the Act' for short).

FACTUAL BACKGROUND

2. The factual background in which the aforesaid

question

arises

for

consideration

need

mention.

The

petitioner is co-owner of a residential property situate in

Bengaluru. The property is a residential property having 42

rooms in all spread out between a stilt floor, ground floor and

four floors along with terrace and common areas. The

petitioner along with other co-owners have executed a lease

deed in favour of the lessee namely M/s.D Twelve Spaces

Private Limited (hereinafter referred to as 'the lessee') on

21.06.2019. The lessee has leased out the residential

property as Hostel for providing long term accommodation to

students and working professionals with the duration of stay

ranging from 3 months to 12 months.

3. The Central Government has issued notification

No.9/2017 - Integrated Tax (Rate) dated 28.06.2017

(hereinafter referred to as 'exemption notification') and has

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granted exemption from payment of goods and services in

respect of services mentioned therein which includes renting

services which are provided with respect to residential

dwelling for use as residence.

4. 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 in prescribed form under

Section 97 of the Act before the Authority for Advance

Ruling,

Karnataka

(hereinafter

referred

to

as

'AAR

Karnataka'). The AAR Karnataka vide Advance Ruling dated

23.03.2020 inter alia held that services viz., renting of

residential dwelling for use as a residence do not fall under

Entry 13 of the Exemption Notification. It was further held

that lessee itself is not using the accommodation. Thus, it

was held that the petitioner has to charge Goods and

Services Tax (hereinafter referred to as 'GST') while issuing

invoice to the lessee provided it is registered under the Act.

Accordingly, it was held that benefit of exemption notification

is not available to the petitioner.

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5. The petitioner thereupon filed an appeal under

Section 100 of the Act before the Appellate Authority for

Advance Ruling, Karnataka (AAAR Karnataka). However, the

AAAR Karnataka by an order dated 31.08.2020 inter alia held

that property rented out by the petitioner is a hostel building

which is more akin to sociable accommodation rather than

what is commonly understood as residential accommodation.

Therefore, the property rented out by the petitioner cannot

be termed as residential dwelling. It was further held that

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. In the result, the appeal

preferred by the petitioner was dismissed. In the aforesaid

factual background, this writ petition has been filed.

SUBMISSIONS OF PETITIONER:

6. Learned Senior counsel for the petitioner submitted

that the expression 'residential dwelling' has not been

defined anywhere in the Act. Therefore, its normal trade

parlance meaning has to be taken into account. It is

6

submitted that residential accommodation which is used for

long term stay has to be construed as residential dwelling. It

is further submitted that zoning regulations of Bengaluru

clearly provide that hostels are allowed