GST on women’s hostels: Holding that hostels renting out rooms for girl students and working women fall under the category of exclusively residential purpose, the Madras High Court has ruled that such hostels are eligible for exemption from GST under a 2017 notification of the central government.
Justice Krishnan Ramasamy passed the orders on Friday on a batch of petitions filed by the administrators of women’s hostels. They had earlier approached the Tamil Nadu State Appellate Authority for Advance Ruling seeking a ruling on whether hostel services can be exempted from paying GST. However, the authority had ruled that such services are not eligible for exemption and are taxable at 18%. This order was challenged at the high court.
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“It is clear that renting out the hostel rooms to girl students and working women by the petitioners is exclusively for residential purpose. This court is of the considered view that the condition prescribed in the notification in order to claim exemption as residential dwelling for use as residence has been fulfilled by the petitioners,” the high court judge said in the order.
He noted services of hostels are covered under Entry12 and 14 of the Notification -Central Tax (Rate), dated June 28, 2017, and so, the petitioners are entitled to be exempted from GST.
The judge said while imposing GST on hostels, it has to be looked into whether the inmates are using the rooms as ‘residential dwelling’ or ‘commercial’ purpose’ because renting residential units would attract GST only when it is used for ‘commercial purpose’.
Justice Ramasamy stressed the issue of levying GST on residential accommodation should be viewed from the perspective of the recipient of the service and not from the perspective of the service provider.
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