The Madras High Court has ruled that hostels for working women and girls should not be subject to GST (Goods and Services Tax) if they are used for residential purposes. The court set aside a demand notice for GST on such hostels, stating that the imposition of GST should be determined by the end-use of the property, rather than the nature of the property or the business of the service provider.
Justice Krishnan Ramaswamy emphasized that rental units are only subject to GST if they are used for commercial purposes. In the case of residential accommodations, the purpose for which the premises are used should be considered in order to claim exemption from GST. The court further stated that the issue of GST on residential accommodation should be viewed from the perspective of the recipient of the service, rather than the service provider.
The order was issued in response to a batch of pleas filed by the managements of private hostels for working women and girls, challenging an order that imposed 18% GST on such hostels by the Tamil Nadu State Appellate Authority for Advance Ruling. The court concluded that the imposition of GST on hostel accommodation should be determined based on the perspective of the recipient of the service.
