Telangana GST AAR: Rent from Government Boys Hostel Taxable Under Law

Tax is needed to be charged on the rent received from the Government social welfare college boys hostel, Telangana Authority for Advance Ruling (TAAR) ruled. It was noted that the petitioner is furnishing the renting of buildings to Greater Hyderabad Municipal Corporation (GHMC) and in municipalities and no direct relation is there between the services furnished via the petitioner and the functions released via the GHMC. Hence such services are not entitled to GST exemption under Notification No. 12/2017.

The petitioner Navya Nuchu is furnishing the building property on rent to the scheduled caste development department, Hyderabad District, Government Welfare Departmental Hostels, Government Social Welfare College Boys Hostels (Govt. SWCBH.) and they accept the Scheduled Castes Development Department, Hyderabad District, Government Welfare Departmental Hostels, Government Social Welfare College Boys Hostel.

The Schedule Caste Development Department furnishes the facilities of the hostel to Students of Scheduled Caste weaker sections and backward classes. They are furnishing to the State Government pure services through the way of any activity concerning any function entrusted to a Municipality/Panchayat under article 243W/243G of the constitution of India.

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The applicant asked for an advance ruling with regard to the taxability of rent obtained from the government social welfare college boys hostel. P. Sumalatha, the authorized representative who appeared on behalf of the petitioner claimed that the applicant furnishes pure services through the way of renting the building property to the Government and hence it is exempt under entry 3 of GST Notification 12/2017.

Contracts provide proof entered via the petitioner that they are furnishing their buildings on rent to the Government in urban areas. Hence such pure services furnished before the State Government will be by way of any activity concerning any function of a Municipality under Article 243W of the Constitution.

The two-member bench of the Authority of Advance Ruling containing S.V. Kasi Visweswara Rao ( Additional Commissioner Commercial Taxes ) and Sahil Inamdar, I.R.S (Additional Commissioner Custom & Indirect Taxes) marked that the applicant is furnishing renting of buildings to GHMC and in municipalities and no direct relation is there between the services furnished via the petitioner and the functions released via the GHMC under Article 243W read with Schedule 12 to the Constitution of India.

Hence such services do not entitle for exemption under Notification No. 12/2017. Consequently, rent from the government social welfare college boys hostel is levied to tax.