There was a prolonged debate going on whether Hostel accommodation provided to students falls under Entry 13 of Notification No. 09/2017 dated September 28, 2017 namely ‘Services by way of renting of residential dwelling for use as residence and was exempt or the same will be covered under S. no. 12 and 14 of the Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017 (“the Service Exemption Notification”) which exempts the supply of hostel rooms for residential purposes to the students where charges are lesser than INR 1000 per day per person.
To analyse the same an application for advance ruling was filed by applicant M/s V S Institute & Hostel Private Limited to seek answer to the below questions:
- Whether hostel accommodation provided by the Applicant to the students for residential purposes where charges are less than INR 1,000 per day during the period August 01, 2021 till July 12, 2022 is exempt from GST?
- What is the position of GST on Hostel accommodation provided after 18th July 2022? And
- Whether hostel accommodation falls within the purview of Entry 13 of Notification No. 09/2017 dated September 28, 2017 namely ‘Services by way of renting of residential dwelling for use as residence and was exempt?
The AAR, Uttar Pradesh, in the matter of V S Institute & Hostel Private Limited [Advance Ruling No. UP ADRG 26/2023 dated May 08, 2023] ruled that hostel accommodation charging less than INR 1,000 per day from August 2021 till July 18, 2022 is exempt from GST. However, from July 19, 2022 and onward the exemption longer applies, and the applicable GST rate is 12%.
FACTS:
M/s. V S Institute & Hostel Private Limited (“the Applicant”) is providing hostel services to the students of educational institutions on annual basis.
The Applicant rented out their building to Sharda University situated at Knowledge Park- III, Greater Noida, U.P for the period November, 2018 to July, 2021, vide agreement dated July 16, 2018.
Further, the Applicant provided residential facilities including food, electricity, Wi-Fi, water etc. as inclusive services, and receives rent INR 1000 per day per person to students of various educational institutes.
The Applicant submitted that the hostel facility during the period August 01, 2021 till the date of seeking advance ruling and will undertake the same in future.
Since, the rendition of service by way of renting of hostel rooms is less than INR 1,000 per day and thus the said services are covered under S. no. 12 and 14 of the Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017 (“the Service Exemption Notification”) which exempts the supply of hostel rooms for residential purposes to the students where charges are lesser than INR 1000 per day per person. The Applicant relied upon the case of the Hon’ble Karnataka High Court in Taghar Vasudeva Ambrish v. Appellate Authority of Advance Ruling [W.P. No. 14891 of 2020 dated February 07, 2022] wherein the court held that “leasing out residential premises as hostel to students and working professionals is covered under Entry 13 of Notification No. 09/2017 dated September 28, 2017 namely ‘Services by way of renting of residential dwelling for use as residence and the petitioner is held entitled to benefit
of exemption notification.
The Applicant filed an application before the AAR, Uttar Pradesh to seek whether the accommodation provided by the Applicant would be exempt or not.
