J&K High Court: Home Dept Must Reimburse GST on Requisitioned Hotel Rentals

The Jammu and Kashmir High Court has decided that the Department of Home is required to pay back the Goods and Services Tax (GST) to hotel owners. This applies to those hotel owners whose properties have been taken over to provide housing for security forces, in addition to the regular rent they receive.

The petitioner, Iqbal Mubarik, has submitted a petition seeking a direction that the tax amount be paid or reimbursed separately by the Home Department, over and above the fixed rent.

Earlier, the rental rates were fixed at much, but the introduction of GST made it obligatory for hoteliers to register under the Act and pay tax on the rental income, a bench of Justices Sanjay Parihar and Sanjeev Kumar cited.

The court cited that “the petitioner is liable to pay GST on the rental income which he is receiving from the Department of Home… shall be legally bound to seek appropriate registration under the CGST/J&K GST Act and deposit the service tax at the prescribed rate with the GST authorities.”

The court recognised that the Rent Assessment Committee set tariffs before the GST regime, and therefore, GST was not included in the original tariff structure. Though now that the supply of rooms for government use is entitled as a taxable service under GST, the Home Department must pay the tax liability.

The court expressed that, “the rental income received by the petitioner and other similarly situated hoteliers is now exigible to GST and, therefore, it is the liability of the Department of Home to reimburse such amount.”

Expressing concern over stagnation in tariff revision since 2013, the court noted, “It shall be a right time for the Department of Home to constitute a proper Rent Assessment Committee to revise the rental in respect of the hotel accommodations it has taken on rent for the last several years.”

While disposing of the petition, the court asked the applicant to get GST registration and deposit applicable taxes, and the Department of Home will pay GST over and above the pre-fixed rent from August 2025.

The government should pay the GST component in addition to the rent, enabling hotel owners to comply with the norms. The applicant must complete GST registration by July 31, 2025.

The applicant is the owner of Hotel Boulevard at Srinagar, and has rented out the premises to the Police Department of Jammu and Kashmir for accommodating Central Security Forces.

The petitioner, as per the Rent Assessment Committee’s 2013 recommendation, has been receiving rent at Rs. 300 per room per day, without any enhancement. No amendment has been made despite representations by similarly situated hoteliers.

Read Also: GST Impact on Hotel and Tourism Industry After Rate Cut

In this petition, the Government has not revised the rent, the GST authorities have raised a tax demand under the J&K GST Act 2017, the applicant argued.

Applicant asks for the direction that the tax amount be paid/reimbursed separately via the Government over and above the fixed rent, as the applicant does not dispute the GST obligation. For GST recovery via the Police Department instead of the petitioner, additional direction is requested.