Case Note & Summary
The petitioner, Taghar Vasudeva Ambrish, filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka at Bengaluru, challenging an order dated 31.8.2020 passed by the Appellate Authority for Advance Ruling, Karnataka (Respondent No.1). The petitioner sought to quash the order and direct the respondents to apply Entry 13 of Notification No.9/2017 dated 28.7.2017 issued under the Integrated Goods and Services Tax Act, 2017, to classify the service provided by him as 'services by way of renting of residential dwelling for use as residence', which attracts nil rate of tax. The petitioner also sought an interim stay of the impugned order. The factual background reveals that the petitioner is engaged in leasing residential premises as a hostel to students and working professionals. The question for consideration was whether such service falls under Entry 13 of the notification. The court, after hearing arguments from both sides, held that the service provided by the petitioner is covered under Entry 13. The court applied the principle of purposive construction, noting that the legislative intent behind the exemption was to promote affordable housing and accommodation. The court observed that a hostel is a residential dwelling as it provides lodging and basic amenities for living, and the use as residence includes temporary stay for education or work. The court directed the respondents to apply Entry 13 to the petitioner's service and classify it as attracting nil rate of tax. The writ petition was allowed with the aforementioned directions.
Headnote
A) Goods and Services Tax - Exemption Notification - Interpretation - Entry 13 of Notification No.9/2017 - Integrated Goods and Services Tax Act, 2017 - The issue was whether leasing of residential premises as hostel to students and working professionals qualifies as 'renting of residential dwelling for use as residence' under Entry 13. The court held that the term 'residential dwelling' includes a hostel, and 'use as residence' includes temporary stay for education or work. The court applied purposive construction to give effect to the legislative intent of providing affordable accommodation. (Paras 1-10) B) Goods and Services Tax - Exemption Notification - Strict Interpretation - Notification No.9/2017 - Integrated Goods and Services Tax Act, 2017 - The court reiterated that exemption notifications must be strictly construed, but where the language is ambiguous, the benefit should go to the taxpayer. The court found that the notification's language was clear and covered the petitioner's service. (Paras 5-8) C) Goods and Services Tax - Hostel Accommodation - Residential Dwelling - Entry 13 - Notification No.9/2017 - Integrated Goods and Services Tax Act, 2017 - The court held that a hostel is a residential dwelling as it provides lodging and basic amenities for living. The fact that the accommodation is shared does not change its character as a residence. The court directed the respondents to apply Entry 13 to the petitioner's service and classify it as attracting nil rate of tax. (Paras 9-10)
Issue of Consideration
Whether the service provided by the petitioner, i.e., leasing of residential premises as hostel to students and working professionals, is covered under Entry 13 of Notification No.9/2017 dated 28.09.2017 issued under the Integrated Goods and Services Tax Act, 2017, namely 'Services by way of renting of residential dwelling for use as residence'.
Final Decision
The writ petition is allowed. The impugned order dated 31.8.2020 passed by Respondent No.1 is quashed. The respondents are directed to apply Entry 13 of Notification No.9/2017 dated 28.7.2017 to the petitioner's service and classify it as 'services by way of renting of residential dwelling for use as residence' attracting nil rate of tax.
Law Points
- Interpretation of exemption notifications
- purposive construction
- principle of strict interpretation of exemption clauses
- doctrine of reading down
- ejusdem generis
