IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI APARESH KUMAR SINGH AND THE HON’BLE SRI JUSTICE G.M.MOHIUDDIN WRIT PETITION No. 36611 of 2025 DATED : 23.03.2026 Between:

M/s Navya Nuchu … Petitioner AND The State of Telangana Rep. by its Principal Secretary, Scheduled Caste Development Department, Secretariat, Hyderabad and eight others … Respondents

ORDER:

Ms. Lochana S Babu, learned counsel appears for Ms. Kruthi Kalaga, learned counsel for petitioner.

Mr. Ananthula Ravinder, learned Government Pleader for Social Welfare appears for respondent Nos.1 to 5.

Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appears for respondent No.9.

2. The petitioner, a proprietorship firm registered under the provisions of the Central Goods and Services Tax Act, 2017, and the corresponding State Goods and Services Tax Act, 2017 (for short ‘the GST Act’), is engaged in the business of providing services by way of renting of immovable property. Its premises bearing House Nos.4-193, 1-193/2 and 4-193/3, Survey No.906, Main Road, Near Anutex, Malkajgiri, Hyderabad, is on lease to respondent No.1 from 01.07.2019 for the purposes of Government’s Social Welfare College Boys Hostel. Respondent No.4, District Collector, Hyderabad, is the competent authority to approve rental expenses on behalf of respondent No.1. It was approved and sanctioned @ Rs.3,36,710/- along with applicable GST per month. Respondent No.1 paid GST @ 18% on the rentals for a period of six months i.e., July, 2019, to December, 2019, which was remitted by the Department to the petitioner. During COVID-2019, this was discontinued. However, the petitioner continued to remit GST component at its own expense amounting to Rs.16,56,613/-. It submitted a representation dated 11.03.2022 to respondent No.4 stating that GST remained unpaid owing to lack of sanction since January, 2020. It also made a representation on 08.06.2022 to respondent No.2 for release of outstanding GST @ 18% from January, 2020, to May, 2022, and November, 2021, to May, 2022. Vide letter dated 20.06.2022, respondent No.2 informed the same to respondent No.3 and that the penalty was being imposed upon the petitioner as it has the obligation to remit GST to the Government. It made another representation on 05.08.2022 to respondent No.2. Vide letter dated 19.11.2022, respondent No.2 sought clarification from respondent No.5 as to whether the liability to bear and remit GST on the rent payable for the subject premises rests with the owner or the tenant. However, no response was received. Respondent No.4 revised the rent in respect of the subject property leased out to respondent No.1, on 17.01.2023. Owing to the uncertainty regarding applicability of GST on rental transaction, the petitioner approached the Authority for Advance Ruling (for short ‘the AAR’) under Section 97(1) of GST Act, read with Rule 104(1) of the Central Goods and Services Tax Rules, 2017 (for short ‘the Rules’). Vide order No.05/2024 dated 09.02.2024, the AAR held that no direct or immediate nexus exists between the services provided by the petitioner and the functions entrusted to the municipality under the Twelfth Schedule read with Article 243W of the Constitution of India. It concluded that the petitioner’s services of letting out the immovable property do not qualify for exemption under Notification No.12/2017 - Central Tax (Rate), dated 28.06.2017 and that the rent paid by respondent No.1 does not qualify for exemption and is therefore liable to GST. Aggrieved by the same, the petitioner preferred an appeal on 04.04.2024 under Section 100 of the GST Act read with Rule 106(1) of the Rules. However, the appellate authority rejected the said appeal on 20.02.2025. The petitioner stated that the rent up to June, 2023, and GST up to December, 2019, had only been released as per letter dated 13.03.2025 sent to respondent No.2. It filed a Writ Petiti