TMI BlogGST on hostel / PGX X X X Extracts X X X X X X X X Extracts X X X X ..... Very recently Madras High Court has ruled that no GST is payable by the landlord who has let out his property to another entity (Tenant) for running a hostel. I presume the said decision holds good even if the tenant is using the place for running paying guest accommodation. The tenant in the above circumstances must be filing his income tax return for running hostel or PG as business income. In this situation, whether the tenant is liable to pay GST under RCM tax even though no GST (forward) is payable by the landlord. - Reply By Sadanand Bulbule - The Reply = Dear Sir Please refer entry 5AA inserted vide Notification No. 05/2022-Central Tax (Rate) dated July 18, 2022 in the principal Notification No.13/2017- Central Tax (Rate) dated June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28, 2017 which states that registered recipient would be liable to pay GST under RCM for service by way of renting of residential dwelling to a registered person . - Reply By Sadanand Bulbule - The Reply = Also I wish to add following: Entry at Sl.No.14 was omitted vide Notification No. 4/2022-Central Tax (Rate) dated 13.07.2022 . Thus in effect only services by way of renting of residential dwelling for use as residence are exempted from GST. Services by a hotel, inn, guest house, club or camp site by whatever name called, for residential or lodging purposes when value of supply is below One thousand rupees are liable to GST w.e.f. 18.07.2022. - Reply By KASTURI SETHI - The Reply = Here the term, 'registered person' implies for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;business purposes' . The end use matters . This legal position existed in pre-GST era also. I agree with Sh.Sadanand Bulbule, Sir. - Reply By KASTURI SETHI - The Reply = Running PG is a commercial activity. Hence taxable under GST. - Reply By KASTURI SETHI - The Reply = Not litigation-free. The possibility of filing civil appeal against Madras High Court judgement with the Supreme Court by the department cannot be ruled out. - Reply By Ethirajan Parthasarathy - The Reply = Thanks to both of you for valuable inputs..As rightly pointed out by Mr.Kasturi Sethi, the Madras High Court decision cannot be taken as Final . We are under the senerio that tenant has to pay tax under RCM going by Madras High Court decision, the landlord is not li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for GST under forward charge. There are few AAR decisions that GST is leviable under forward charge by the landlord and hence there will be no question of RCM tax levy on the tenant. It is a tough call for consultants to advise the clients in the above situation. - Reply By Ethirajan Parthasarathy - The Reply = In addition, If any one takes initiative of paying tax, can the other party ( land lord or tenant) defend tax demand on them by the department taking opposite view - Reply By Sadanand Bulbule - The Reply = Dear Sir Since the interpretations and decisions of the adjudicating authorities are highly unpredictable and vulnerable, many a times the arguments on merits miserably fail.So the consultants are standing on the edge of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liff without wings. Lack of knowledge and the height of ego are the root causes for the funeral of merits. This trend is making the consultants to think so differently about everything they thought before. A thing is not high if one can reach it; it is not great if one can reason about it; it is not deep if one can see the bottom . __This was the dream of the aw makers while launching GST regime. And rest is all bitter history! - Reply By Sadanand Bulbule - The Reply = Plz read it as law makers. - Reply By Shilpi Jain - The Reply = The Madras HC decision and the Karnataka HC decision in the case of Taghar Vasudev - 2022 (2) TMI 780 - KARNATAKA HIGH COURT , bring out the main aspect that hostel room is still a residential dwelling . These ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses should be looked at bringing out this ratio and principle where the department has been arguing that hostel is a commercial business and cannot be regarded as a residential dwelling. - Reply By Shilpi Jain - The Reply = This ratio needs to be applied in the context of the provisions appearing at each point of time. So today, the landlord renting a building (hostel set up) to a person who would run the hostel would still be liable to GST, but the tenant running the hostel and say renting to students will be exempt - Reply By KASTURI SETHI - The Reply = Sh.Sadanand Bulbule Ji, Sir, Your grievance is correct but the original Adjudicating Authority is not the end of the road. In India still honesty, sincerity, integrity, morality, devotion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and dedication to duty exist. All is not bad. All is not lost. Also see the other side. Are all assessees honest ? Are all assessees give due respect to the chair (Proper Officer) ? Are the assessees without ego ? Are they well disciplined when they appear before the Adjudicating Authority or Appellate Authorities ? These aspects are worth examination. So there are so many factors. You are well aware of the percentage of the cases lost by the department. Majority of the cases are decided in favour of the asessees . In my view only 5% cases out of 1000 are won by the department. At the same time, I do not rule out t he possibility of the major factors i.e. 'ego' 'lack of knowledge' 'prejudiced mind' 'biased mind&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; which are bottlenecks in the way of providing justice. Disclaimer : These are my personal views for the purpose of education of the readers of TMI and also in the interest of the assessees. - Reply By KASTURI SETHI - The Reply = A hostel and a paying guesthouse are residential dwellings. What makes the difference is that whether it is being used for a commercial purpose or not . The word, 'hostel' does not signify the purpose for a student only. - GST on hostel / PG - Query Started By: - Ethirajan Parthasarathy Dated:- 2-4-2024 Last Replied Date:- 6-4-2024 Goods and Services Tax - GST - Got 13 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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