GST Applicability of Private Hostels, Goods and Services Tax - GST

[ROHIT GOEL]

Respected experts,

W.e.f 18.7.2022, tax@12% has been levied on renting of accommodations for hotel/inn/guesthouse etc. Mr. A is running a private hostel wherein he is providing hostel rooms to students on annual contract basis (renewable at end of every year till completion of study of student). Before amendment, Mr. A is not charging any GST on hostel fees.

Hon'ble Karnataka HC recently in TAGHAR VASUDEVA AMBRISH VERSUS APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA , COMMISSIONER OF CENTRAL TAX BANGALORE, ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LGSTO-90, BENGALURU = 2022 (2) TMI 780 - KARNATAKA HIGH COURT, W.P. No.14891 OF 2020 (T-RES) Dated: - 7-2-2022 held that such private hostels are covered under the category of residential dwellings and as such covered under Exemption Notification no. 12/2017 CGST(Rate) Entry no. 12. Similar decisions were also rendered under Service tax regime however contrary decisions have been made by some AARs under GST.

Your expert opinion is requested as to whether Mr. A shall rely upon High Court's decision and continue to be exempted from GST or start charging GST if a conservative approach is preferred?

Posts / Replies

[Amit Agrawal]

If conservative approach is preferred, risk-free approach seems that Mr. A should opt for advance ruling (where reliance can be placed in various favorable court rulings) and get certainty on taxation - one way or other.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

AARs are not binding at all. Also, these kind of queries indicate what a havoc is created by these AARs and the manner in which the government is implementing GST. People are forced to go against the HC and SC decisions!!

In case the hostel is run on a rented premises then Mr. A could consider paying GST since he is anyway liable to pay GST under RCM on the rental expense. This GST can be used to set off the GST on the hostel rentals.

[Shivam Choudhary]

Suppose, Mr. A is running a private hostel wherein he is providing hostel rooms & food to students on annual contract basis as a bundled service (renewable at end of every year till completion of study of student). Before amendment, Mr. A is not charging any GST on hostel fees.

What should be the GST implication after the amendment dated 18.07.2022?