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TMI Blog2024 (3) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023, Mr.B.Ramanakumar, for Respondent No.1 in W.P. No. 33250 & 33364 of 2023, Mr.Haja Nazirudeen, Addl.Advocate General-I, asst.by Mr.V.Prasanth Kiran, G.A.(Tax) for Respondent Nos.2 to 3 in all W.Ps. COMMON ORDER Since the facts and circumstances are similar and also as common issues are involved in these Writ Petitions, they are taken up together and being disposed of vide this common order. 2. The petitioners herein, having obtained licence, are running private ladies hostels by providing residential accommodation and food to the college students and working women on monthly basis with reasonable tariffs. According to the petitioners, they are carrying on ladies hostels with a philanthropic motive and purpose for providing safe and secure environment for the student girls and working women who hail from far away places and remote villages and who are not in a position to secure independent residential accommodation by paying huge rents and advance in the city. The monthly tariff per student or per inmate ranges between Rs. 1200/- to 6,500/- per month. 3. While so, under the Goods and Service Tax regime after the introduction of the Central Goods and Services Tax Act, 2017 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Tax (Rate) dated 28.06.2017 dated 28.06.2017 and under the identical Notification under the TNGST Act, 2017 and also under Entry 13 of Exemption Notification No.9/2013- Integrated Tax-Rate dated 28.06.2017 as amended? (b) Whether the Applicant hostel being eligible for exemption under Sl. No. 12 of Notification-12/2017 (CTRate) dated 28.06.2017 as amended would at all be required to take registration under the GST Enactments by virtue of the Exemption Notifications as afore mentioned and also under the provisions of Section 23 of the CGST/TNGST Act 2017? (c) Whether any specific tariff entry is applicable to hostels under the Tariff Notification, in the event of requirement of registration? (d) Whether, in the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply? (e) Whether the judgement of the Division Bench of the Hon'ble Karnataka High Court in the case of "Taghar Vasudeva Ambrish -vs- Appellate Authority for Advanced Ruling, Karnataka reported in Manu/KA/0327/2022 is applicable to the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is reflected in Entry No.12 of Exemption Notification No.12 of 2017. Therefore, by referring the above judgment, she would submit that renting the premises includes hostels and thus, the exemption provided under Entry No.12 of Exemption Notification No.12 of 2017 would apply in the present case also. In spite of the same, the 2nd respondent had passed the impugned orders contrary to the law laid down by the Hon'ble Division Bench of Karnataka High Court in the above judgement. 9. As regards the maintainability of the present Writ Petitions since the petitioners without exhausting the appeal remedy available under Section 100 of the TNGST Act, 2017, the learned counsel appearing for the petitioners would submit that mere availability of alternative remedy is not an embargo to entertain the Writ Petitions when there is gross illegality apparent on the face of the impugned orders passed by the 2nd respondent. She would further contend that though technically it would be open to the petitioners to work out alternative remedy before the Appellate Authority, it would be a mere exercise in futility as the appeals would be certainly met with the fate of dismissal as the appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity for Advance Ruling, Goods and Services Tax, reported in (2023) 153 taxmann.com 549 (Calcutta); iii) Jotun India Pvt. Ltd., vs. Union of India and others reported in (2023) 109 GSTR 191 (Bom.); iv) Columbia Sportswear Company vs. Director of Income Tax, Bangalore reported in (2012) 11 SCC 224; Thus, the learned Senior counsel pleaded to dismiss the present writ petitions in limine. 13. As far as maintainability is concerned, both the parties have admitted the fact that as against the order passed by the 2nd respondent, a statutory appeal provision is very much available. However, this Court is of the view that the availability of alternate remedy will not take away the right of the petitioner to approach the High Court since filing appeal before the Appellate Authority would only be an empty formality, particularly, when the 2nd respondent failed to follow the orders passed by the Karnataka High Court. 14. In the matter of Taghar Vasudeva Ambrish case, the Hon'ble Division Bench of Karnataka High Court had held that the 'hostel services' provided by the registered person would fall within the purview of the exempted services under Entry No.13 of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above would make it clear that when a higher Authority passes an order, it would bind the lower Authority. Further, it was held that even though it was technically open to prefer an appeal against the Appellate Authority, the same would only be a mere exercise of futility when the Superior Officers had already passed orders in exercise of their statutory jurisdiction. When such being the case, the High Court ought to have considered and pronounced upon the merits of the contentions raised by the parties and the summary dismissal of the writ petition is not justified. For the said reasons, the Hon'ble Apex Court had set aside the order and remitted the case to the concerned Court for fresh disposal. 16. In the present case, following the law laid down by the Hon'ble Apex Court in the Filterco case (referred supra), this Court is also of the view that even though alternate remedy is available, the same would only be a mere exercise in futility and in such case, the affected party can file a writ petition. 17. Further, in the judgement of Tvl.Sakthi Masala (P) Ltd., vs., The Special Commissioner of Commercial Taxes and Others reported in MANU/TN.9392/2007, this Court had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese decisions of the Supreme Court, the views taken by the Full Bench of the Tribunal and by the Division Bench of this Court do not lay down the correct law." 19. A perusal of the above judgments of this Court would make it clear that even though alternate remedy is available, still in appropriate cases, where the orders of either the Hon'ble Division Bench of the High Courts or Superior Authority is not followed by the Statutory Authorities, the same can be challenged by way of writ petition. Following the same, this Court is of the considered view that these writ petitions are maintainable. 20. Coming to the merits of the case, Ms.Aparna Nandakumar, learned counsel appearing for the petitioners would vehemently contend that the hostels run by the petitioners would fall within the purview of 'residential dwelling' occurring in Entry 12 of Exemption Notification No.12/2017, dated 28.06.2017 and thereby, they are exempted from levy of GST. Though no specific definition for the term 'residential dwelling' is mentioned in GST enactments or Financial Act, 1994, she would refer to the Taxation of Services an Education Guide, dated 20.6.2012 issued by the Central B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al dwelling and used for residential for the purpose and thereby, they are exempted from levying GST. 24. Further, he would submit that the petitioners are running ladies hostels by rendering residential accommodation and food services, which would fall within the ambit of definition 'supply' as provided in Section 7 of TNGST/CGST Acts. The petitioners registered under various Acts to run their hostel business and their acts covered under the definition of the term 'business' as per Section 2(7) of the TNGST/CGST Acts. 25. The services provided by the petitioners do not fall under 'services by way of renting of resendital dwelling for use as residence' since they are letting out a single room to various inmates for various time period for a pecuniary benefit as part of their business and more over, they are not entering any rental agreements with the inmates for transfer of rights of the specified place for a specific period and hence, it does not cover the definition of 'residence' which is controlled by the Tamil Nadu Rent Regulation Act. The rents received from the renting out or subletting of property is subject to Tax Deduction at Sources, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices. The second respondent has given the entire discussion regarding the phrase occurring in Notification 12/2017- CT(Rate) dated 28.06.2017 only with regard to permanent character of residence, which is absent in the case of 'hostel accommodation'. In fact, obtaining License/ Certificates under various provisions of Statutory laws for running Ladies Hostels, are mandatory, whereas these are not mandatory or applicable to a residential building or "residence dwelling for use as residence". Therefore the hostel building cannot be considered as residential dwelling but only can be termed as a non-residential complex. 29. As regards the decision of the High Court of Karnataka in the case of "Taghar Vasudeva Ambrish Vs. Appellate Authority for Advance Ruling, is concerned, it is stated that since the the matter is sub judice before the Hon'ble Supreme Court in SLP (Civil) No.22980 of 2022, the ratio decided therein, cannot be made applicable to the case of the petitioners. 30. That apart, he would submit that hotels are meant for a temporary stay and have lot of facilities and staff, but hostels are used for a longer period and have basic facilities with minimal staff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Later, vide notification no. 04/2022- Central Tax (Rate) dated 13th July 2022, said Sl. No. 12 of notification no. 12/2017- Central Tax (Rate) dated 28th June 2017 was amended. According to the amendment, after the words 'as residence', the words 'except where the residential dwelling is rented to the registered person' has been added. Hence, post issuance of notification no. 04/2022- Central Tax (Rate) dated 13th July 2022, Sl. No. 12 as effective from 18th July 2022 will read as under - Heading Description of service Rate Condition Heading 9963/ Heading 99721 Services by way of renting of the residential dwelling for the use as a residence except where the residential dwelling is being rented to the registered person NIL NIL 36. Hence, with effect from 18th July 2022, GST applicability on renting of residential dwelling will be as follows: Particulars GST position post 18th July 2022 Renting of residential dwelling for residential purpose to the person registered under GST Renting of residential dwelling for residential purpose to the person not registered under GST Renting of residential dwelling for commercial purpose to the person registered under GST Renting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodation services do not fall within the ambit of Charitable Activities as defined in paragraph No.2(r) of the Exemption Notification No.12 of 2017. However the services provided by way of hotel, motel, inn, guest house, camp site, lodge, house boat, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempted. Thus, accommodation service in hostels, including trust, having declared tariff below one thousand rupees per day is also exempted. 40. By referring the above, the 2nd respondent came to the conclusion that the hostel service will not fall under the exempted category of Entry No.12 of Exemption Notification No.12 of 2017. In the Entry No.12 of Exemption Notification No.12 of 2017, it has been mentioned about services provided by way of renting of residential dwelling for use as residence. Further, in the Entry No.14 of Exemption Notification No.12 of 2017, there is a specific mention with regard to the service provided by hotel, motel, inn, guest house, camp site, lodge, house boat, for which, they had granted exemption up to certain limit. Subsequently the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved as under: "Thus, it is evident that the expression 'residence and 'dwelling' have more or less the connotation in common parlance and therefore, no different meaning can be assigned to the expression 'residential dwelling' as it cannot be held that the same does not include hostel which used for residential purposes by students or working women". While observing so, the Karnataka High Court has ultimately held that the service provided by the petitioner therein, i.e. leasing out residential premises as hostel to students and working professionals is covered under Entry 13 of Notification No.9/2017 dated 28.09.2017, namely, services by way of renting of residential dwelling for use as residence issued under the Act and the petitioner is held entitled to benefit of exemption notification. 43. In other words, the exemption was being given to any person who may engage in renting of residential dwelling used as residence. It is further not specifically set out in the notification what would be considered as a short stay or long stay. This exemption benefit was available when landlord rented out to corporates/tenants who in turn rent out to students/working p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case also, the respondent trust would be entitled to claim possession of the suit premises for the requirement of the trust. If this be so, there is no force in the argument pressed into service that no decree could be passed as the nature of requirement would be prohibited by Section 25 of the Act." 45. It is well settled that when the word is not defined in the Act itself, it is permissible to refer to the Dictionaries to find out the general sense in which the word is understood in common parlance. 46. Therefore, it may also be referred to the meaning of the expression 'residence' and 'dwelling' as defined in Concise Oxford English Dictionary 2013 Edition as well as Blacks Law Dictionary 6th Edition to ascertain its meaning in common parlance and in popular sense which read as under: The Concise Oxford Dictionary: Domicile: 1. the country in which a person has permanent residence. 2. the place at which a company or other body is registered. Residence: 1. the fact of residing somewhere. 2. a person's home. 3. the official house of a government minister or other official figure. Blacks Law Dictionary: Residence: Place where one actually lives or has his hom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is subtle difference between the two and the hostels are nothing but accommodation which provide temporary lodging to the inmates by converting a residential dwelling into a hotel and providing hotel service, which eventually makes the same dwelling non-residential' and taxable and in the instant case, the residential homes have been converted into a commercial purpose and thereby losing its status as 'residence dwelling'; iv) that in order to run hostel the license from Shop and establishment Act is required and it is not required for residence dwelling for use as residence.. Shops and establishment license are required for commercial establishment. Hence hostels falls under commercial establishment and hence GST should be applicable on hostel charges. v) that the purpose and objective of the notification is nothing but to avoid taxing on residential properties taken on rent by family or individuals and the benefit of exemption is not extended to the premises which do not qualify as residential dwelling for use as residence; vi) that the 'hostel accommodation' is not equivalent to 'residential accommodation' and hence, the services supplied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using the common kitchen and sharing the foods as their own. Admittedly, GST is not applicable if a residential property is rented out to any persons in their personal capacity and for use as their own residence. In other words, if a residential property is rented out, that too for residential purpose, then the rental income derived from such property does not attract GST. However, if a person rents out any immovable property for doing business purposes, it would attract GST at a rate of 18%. Assuming for a moment that a landlord owns a building consisting of two rooms and a kitchen and attached bathrooms and if he gives it to a family consisting of four members for residential purpose, on a monthly rent of Rs. 20,000/- plus 2,000/- towards maintenance and other charges, then no GST will attract. While so, if four girl students or four working women join together and take a house on rent by bearing the rent at Rs. 5,500/- each, they are not liable to pay GST. 53. If the same 4 students are staying in a hostel room and paying rent where they are using the room allotted to them as their residential dwelling unit, which includes kitchen, wash room, cots and beds, so as to enable the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be exempted from GST, whereas a Manager, who is working in a same office and can afford to pay around a sum of Rs. 30,000/- to Rs. 50,000/- as rent will be exempted from GST by citing the reason that the hostel accommodation would fall within the purview of GST. However, it is not the intention of the Legislature to tax the poor people. The meaning of "residential dwelling" mentioned in the Entry No.12 of Exemption Notification No.12 of 2017 would cover both the poor and rich people. 56. Ultimately, the Authorities have to look into the aspect as towhether the particular place is a dwelling unit or not. When such being the case, since the hostellers are staying in the room for months together, it cannot be construed as non-residential unit and certainly it is a residential dwelling as provided in the Entry No.12 of Exemption Notification No.12 of 2017. Thus, this Court has no hesitation to hold that the 'hostel services' provided by the petitioners would squarely fall within purview of Entry No.12 of Exemption Notification No.12 of 2017. Further, in the present case, no commercial activities can be attributed against the owners of the hostels since they have been pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il LEGAL PRINCIPLES: 10. The issue with regard to interpretation of exemption notification is no longer res integra and the Constitution Bench of the Supreme Court in 'DILIP KUMAR AND COMPANY AND OTHERS while dealing with the reference pertaining to interpretation of an exemption notification, has answered the reference in the following terms: 66.1 Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. 66.2 When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject / assessee and it must be interpreted in favour of the revenue. 66.3 The ratio in sun Export case is not correct and all the decisions which took similar view as in sun Export case stand overruled. The aforesaid principles pertaining to interpretation of exemption notification were reiterated by Supreme Court in 'THE STATE OF MAHARASHTRA Vs. SHRI VILE PARLE KELVANI MANDAL & ORS'. 2022 SCC ONLINE SC 18. 11. It is well settled rule of Statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is used for the purposes of the hostel of students and working women is classified in residential category in the Revised Master Plan 2015 of Bangalore City. The Supreme Court in KISHORE CHANDRA SINGH VS BABU GANESH PRASAD BHAGAT AIR 1954 SC 316 has held that expression residence only connotes that a person eats, drinks and sleeps at that place and it is not necessary that he should own it. The aforesaid decision was referred to by Bombay High Court in BANDU RAVJI NIKAM SUPRA. The hostel is used by the students for the purposes of residence. The students use the hostel for sleeping, eating and for the purpose of studies for a period ranging between 3 months to 12 months. In the hostels, the duration of stay is more as compared to hotel in guest house, club etc. 14. It is well settled that when the word is not defined in the Act itself, it is permissible to refer to the dictionaries to find out the general sense in which the word is understood in common parlance. (SEE: MOHINDER SINGH VS STATE OF HARYANA AIR 1989 SC 1367 and COMMISSIONER OF CENTRAL EXCISE , DELHI vs. ALLIED AIRCONDITIONING CORPN. (REGD) (2006) 7 SCC 735). Therefore, we may also refer to the meaning of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; is unintelligible and is not relevant for the purposes of determining the eligibility of the petitioner to claim the benefit under the exemption notification. 16. So far as the submission that the petitioner is registered as commercial establishment under the Karnataka Shops and Commercial Establishment Act, 1961 or that a trade licence has been issued by BBMP, suffice it to say that it is wholly irrelevant for the purposes of determining the eligibility of the petitioner under the exemption notification. 17. In view of the preceding analysis, the order dated 31.08.2020 passed by the AAAR Karnataka is quashed and it is held that the service provided by the petitioner i.e., leasing out residential premises as hostel to students and working professionals is covered under Entry 13 of Notification No.9/2017 dated 28.09.2017 namely 'Services by way of renting of residential dwelling for use as residence' issued under the Act. The petitioner is held entitled to benefit of exemption notification. In the result, the writ petition is allowed." 58. In view of the above finding and by following the law laid down in the above judgement by the Hon'ble Karnataka High Court, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be collected only from the recipient of the service and not from the service provider. As far as service provider is concerned, he is collecting the GST from the recipient of the service and making deposit with the Central Government. 63. While adverting to the imposition of GST on hostel accommodation, it has to be looked into as to whether the inmates of the hostel rooms, are using the premises as their residential dwelling or commercial purpose since renting of residential unit attracts GST only when it is rented for commercial purpose. So, in order to claim exemption of GST, the nature of the end-use should be 'residential' and it cannot be decided by the nature of the property or the nature of the business of the service provider, but by the purpose for which it is used i.e. 'resident dwelling' which is exempted from GST. Therefore, this Court is of the considered view that the issue of levy of GST on residential accommodation should be viewed from the perspective of recipient of service and not from the perspective of service provider, who offers the premises on rental basis. 64. In the light of the above discussion, it is clear that the renting out the hos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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