Circular 43T


GST – Andhra Pradesh AAAR - Leasing of premises for residential hostel - The appellant owns certain residential buildings and leased them to educational institutions/ societies for the purpose of accommodation of their students - As per the agreements entered with clients, the appellant receives monthly rental amounts from the lessees - Whether amount received for leasing residential hostel rooms is exempt under Sl.No.14 (Heading 9963) or Sl.No.12 (Heading 9963) of Notification No.12/2017-Central Tax (Rate), as amended upto 25.01.2018 - Advance Ruling Authority vide impugned order held that the appellant is not eligible for exemption from GST under the said notifications – HELD - The premises in question was not built as a residential dwelling nor to be used for residence by the tenant of the building (lessee) but only to be used for furtherance of business of the lessee i.e., running hostel accommodation for students, executives etc. - in order to claim exemption, the category of building should be a Residential Dwelling, however in the present case, the category of building as mentioned in the lease deed is that of a “students’ hostel” - In no way a ‘students’ hostel’ can be equated to a ‘residential dwelling’ and it is therefore not eligible for exemption under Sl.No.12 (Heading 9963) of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended upto 25.01.2018 - in the instant case, the premises is put into use which is more akin to a ‘Hotel / Guest House / Inn etc.’ and definitely different from a ‘Place of Residence’ in common understanding – further from the lease document, it is clear that the lessee is not going to use the rented property as ‘residence’ but only going to sub-lease or rent out to others like students of educational institutions, etc., for their use for furtherance of business - unless the twin conditions of ‘renting of residential dwelling’ for ‘use as residence,’ being inter-twined and inseparable, are not met, the exemption is not available - If there is a conditional exemption in GST based on end-use, the end-use has to be determined with respect to facts and for the recipient of the services only from the supplier directly and it is not for the department to see how the services are finally put to use by the recipient in turn and so on - the ruling given by the Advance Ruling Authority is upheld and the appeal is rejected

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