GST Exemption for Hostel Accommodation in Residential Dwelling {The State of Karnataka v. Taghar Vasudeva Ambrish 2025 INSC 1380; Civil Appeal Nos. 7846–7847 of 2023 (SC)}
Facts
- The respondent co-owned a residential building in Bengaluru consisting of 42 rooms.
- The property was leased to M/s DTwelve Spaces Pvt. Ltd., which operated it as a hostel/PG accommodation for students and working professionals for stays ranging from 3 to 12 months.
- The respondent claimed GST exemption under Entry 13 of Notification No. 9/2017-IGST (Rate) for renting a residential dwelling for use as a residence.
- The AAR and AAAR denied the exemption, holding that the lessee company was not itself using the property as a residence and that hostel accommodation was not a residential dwelling.
- The High Court reversed those rulings and granted the exemption. The State appealed to the Supreme Court.
Issue
Whether leasing a residential property to a company that further sub-leases it as hostel accommodation to students and working professionals qualifies for GST exemption under Entry 13 of Notification No. 9/2017 as “renting of residential dwelling for use as residence”?
Held:
The leasing of a residential building to an aggregator company for operation as a hostel/PG accommodation for students and working professionals constituted “renting of a residential dwelling for use as a residence” under Entry 13 of Notification No. 9/2017. Therefore, for the period prior to 18.07.2022, the rental income was exempt from GST, notwithstanding that the immediate lessee was a commercial entity and the premises were occupied through sub-leases.
