In re Navya Nuchu (GST AAAR Telangana)
The Telangana Appellate Authority for Advance Ruling (AAAR), in the case of In re Navya Nuchu, has ruled that renting a building to the Scheduled Castes Development Department for use as a social welfare college hostel is a taxable service under the Goods and Services Tax (GST) regime. The AAAR upheld the initial ruling by the Telangana Authority for Advance Ruling (AAR), dismissing the appellant’s claim that the service was exempt under the category of “pure services” provided to a governmental authority for functions related to a Municipality or Panchayat.
The appellant, M/s Navya Nuchu, had rented a property to the Scheduled Castes Development Department, which used it to operate a Social Welfare College Boys Hostel. The firm argued that this service was exempt from GST under Entry No. 3 of Notification No. 12/2017. This notification provides an exemption for “pure services” provided to a governmental authority “in relation to any function entrusted to a Panchayat under Article 243G… or a Municipality under Article 243W of the Constitution.” The appellant contended that providing accommodation for a social welfare hostel was a service in relation to a function of social justice and welfare, which is part of the responsibilities of municipalities and panchayats.
