Telangana AAR Applies GST as No Direct Link B/W Building Rental to Municipalities & Article 243W

GST is payable for providing renting services for buildings to the Government Social Welfare College Boys Hostel and in municipalities the Telangana Authority of Advance Ruling (AAR) stated.

The bench of S.V. Kasi Visweswara Rao and Sahil Inamdar has notified that the petitioner is furnishing renting of buildings to GHMC and municipalities, and there is no direct connection between the services provided via the applicant and the functions released via the Government Social Welfare College Boys Hostel under Article 243W read with Schedule 12 to the Constitution of India.

The petitioner has joined an agreement with the Scheduled Castes Development Department, Hyderabad District, Government Welfare Departmental Hostels, and the Government Social Welfare College Boys Hostel (Govt SWCBH) to rent out the property to run the Social Welfare College Boys Hostel.

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The Scheduled Caste Development Department is providing hostel facilities to students of Scheduled Caste weaker sections and backward classes. They are furnishing to the State Government refined services via any activity concerning any function entrusted to a Municipality or Panchayat under Article 243W/243G of the Constitution of India, which is exempted under the GST Act, 2017.

The petitioner asks for an advance ruling on the issue of whether rent received from the Govt. SWCBH is taxable or not.

The applicant is giving building property on rent for scheduling caste development department, Hyderabad district, government welfare departmental hostels, and government social welfare college boys hostels (Govt. SWCBH.). They are supplying services by giving the building property on rent to the government, and hence it is exempt under entry 3 of GST Notification 12/2017.

The GST AAR cited that under serial no. 3 of Notification No. 12/2017, pristine services furnished for any function assigned to a municipality under Article 243W of the Constitution of India are qualified for exemption from GST. The exemption must be associated with the functions enumerated under Article 243W of the Constitution of India, i.e., those processes listed under the 12th schedule. Schedule 11 to the Constitution of India contains “Education, including primary and secondary schools” at serial no. 17. However, Schedule 12 does not contain such a specific entry. Hence, the applicant is not qualified for the same exemption.