In re Aluri Krishna Prasad (GST AAAR Andhra Pradesh)
In this case The agreement between the appellant and the lessee is on built up area basis and not on the basis of unit cost of accommodation and hence, it cannot be treated as given for residential dwelling. The appellant is not extending accommodation to the students but to the lessee to whom the building is given on rent is providing accommodation to the students.
AAR ruled that unless the twin conditions of ‘renting of residential dwelling’ for ‘use as residence,’ being inter-twined and inseparable, are not met, the exemption is not available. As per settled law, in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms.
If there is a conditional exemption in GST based on end-use, the end-use has to be determined with respect to facts and for the recipient of the services only from the supplier directly and it is not for the department to see how the services are finally put to use by the recipient in turn and so on. In the instant case there is no evidence to show that either the building was a residential dwelling or it is going to be put to use as residence for himself by the lessee as discussed in detail above. The lower authority has considered all the facts and details of the case and examined them in the light of the relevant provisions of the APGST Act and Rules 2017 along with relevant notifications while deciding the case.
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 AAR Order : GST payable on leasing of residential hostel rooms
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
(Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act).
At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the APGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and APGST Act”] by M/s.Aluri Krishna Prasad (herein after referred to as the “Appellant”) against the Advance Ruling No. AAR No. 18/AP/GST/2020 dated 15.06.2020 issued by Authority for Advance Ruling, Andhra Pradesh.
1. Background of the Case:
The appellant,-M/s.Aluri Krishna Prasad, in the present appeal filed against the ruling given by the Hon’ble Advance Ruling Authority, Andhra Pradesh holding that rental amounts collected by the appellant from the lessee who had used the said buildings for providing accommodation to students 1s liable to GST though the said buildings were used for residence, denying exemption provided under Notification No.12/2017-CT (Rate) dt:20.06.2017 as amended against the settled legal position.
The appellant owns certain residential buildings at Vijayawada and he leased them to certain educational institutions/ societies for the purpose of accommodation of their students. Copies of the lease agreements were submitted. As per the agreements entered with clients, the appellant receives monthly rental amounts from the lessees. The buildings given on rent are constructed with small rooms to suit for accommodation of students.
The building which the appellant had given on rent are used only for hostel accommodation by the students for the purposes of residence and the amount collected by the lessees from the students is less than Rs. 1000/- per month.
Notification No.12/2017-CT (Rate) dt:20.06.2017 as amended exempts services by way of renting of residential dwelling for use as residence by any person from GST. Relevant entry of the notification is as follows:
