GST not leviable on rent received on leasing residential premises to students, staff and teachers

By POONAM GANDHI Goods and Services Tax Judiciary March 16, 2026

TaxGuru Citation: 2026 taxguru.in 3179
Case Name: Bhandary Gas Agency Vs Joint Commissioner of Commercial Taxes (Karnataka High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Karnataka High Court

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Bhandary Gas Agency Vs Joint Commissioner of Commercial Taxes (Karnataka High Court)

Karnataka High Court held that the rent received by leasing out residential premises for the purpose of students, staff and teachers would not be exigible / amenable to GST. Accordingly, order is set aside and present petition is allowed.

Facts- On 02.08.2022, the 2^nd respondent conducted an audit and prepared a report u/s. 65(6) of the GST Act, 2017 and included the rent received from the schedule property, which was leased out by the petitioner with Bhandary Foundation for providing the schedule property for accommodation of students, teachers and staff. On 09.09.2020, the Gram Panchayath has issued the certificate declaring the schedule property as a residential dwelling place.

In pursuance of the same, the refund application dated 26.09.2022 having been filed by the petitioner, the 2^nd respondent filed a revised audit report by observing that the excess amount paid by the petitioner in a sum of Rs.62,50,716/- which was paid under protest was correct and that the petitioner was not entitled to refund. On 07.11.2022, the petitioner filed objections to the revised audit report highlighting that the fee collected from the petitioner was in relation to the scheduled property which is a residential premises and was being used for the accommodation of students, staff and teachers, despite which, the 2^nd respondent proceeded to pass orders dated 10.11.2022 and 17.12.2022 rejecting the refund request. Aggrieved by the said refund rejection orders, the petitioner filed an appeal on 17.01.2023. On 25.01.2023, the 2nd respondent prepared a revised audit report stating that the amount paid by the petitioner under protest was not in excess. The petitioner filed an appeal against the audit report dated 25.01.2023. The petitioner preferred appeals dated 17.01.2023 and 06.03.2023 against the rejection of refund application as well as the revised audit report, to which the 2^nd respondent issued the impugned Endorsement dated 23.03.2023 and 1^st respondent passed the impugned order dated 10.01.2024 rejecting the appeal filed by the petitioner for refund, who is before this Court by way of the present petition.