In re Aluri Krishna Prasad (GST AAR Andhra Pradesh)
Whether amount received for leasing residential hostel rooms is exempt under Sl.No.14 (Heading 9963) of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended upto 25.01.2018 and Whether amount received for leasing residential hostel rooms is exempt under Sl.No.12 (Heading 9963) of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended upto 25.01.2018?
The applicant is rather renting his immovable property consisting of 170 hostel rooms with attached bathrooms to the lessee for the purpose of commercial activity, who in turn sub leases it to Narayana Educational Society for the purpose of accommodating students. Now we examine whether the property is a residential dwelling and it is also used for purpose of residence only. Residential dwelling is not defined anywhere in the Act. Hence, if we go by common parlance and general understanding of the term,
A Residential dwelling unit means a building or structure or part of a building or structure that is used for a home or residence by one or more persons who maintain a household. It also means a mobile home regardless of ownership of the land.
In the instant case, it is evident from the above reading, that the property under question is not a home or residence being used by a family or group of a members maintaining a regular house hold, but used for commercial purposes of accommodating students in bulk numbers. A temporary stay of the students will not merely qualify the purpose “for use as residence” and hence it is not qualified to be listed under heading 9963 or 9972.
Therefore, activity under question is non residential property rented out for commercial activity and supply of such services, in the facts and circumstances of the case, arc classifiable as “Rental or leasing services involving own or leased nonresidential property” under Service Code (Tariff) 997212. It is taxable in the hands of the lessor and is liable for IGST at the rate of 18 percent.
Read AAAR Order : GST not exempt on accommodation rented for commercial purposes of accommodating students
