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TMI Blog2022 (2) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... ND 2. The factual background in which the aforesaid question arises for consideration need mention. The petitioner is co-owner of a residential property situate in Bengaluru. The property is a residential property having 42 rooms in all spread out between a stilt floor, ground floor and four floors along with terrace and common areas. The petitioner along with other co-owners have executed a lease deed in favour of the lessee namely M/s. D Twelve Spaces Private Limited (hereinafter referred to as 'the lessee') on 21.06.2019. The lessee has leased out the residential property as Hostel for providing long term accommodation to students and working professionals with the duration of stay ranging from 3 months to 12 months. 3. The Central Government has issued notification No.9/2017 - Integrated Tax (Rate) dated 28.06.2017 (hereinafter referred to as 'exemption notification') and has granted exemption from payment of goods and services in respect of services mentioned therein which includes renting services which are provided with respect to residential dwelling for use as residence. 4. The petitioner with a view to seek clarification with regard to his eligibility t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied while interpreting an exemption notification and the regard must be had to its purpose and object. 7. It is also urged that in the exemption notification, no condition has been laid down that tenant alone must occupy the building and therefore, no additional condition can be read into the exemption notification. It is argued that the activity carried out by the petitioner is not a business activity and the premises are used for residential purposes. It is contended that there is a perceptible difference between hotel or lodging house and student hostel. In support of aforesaid submissions, reliance has been placed on the decision of the Supreme Court in 'STATE OF KERALA Vs. MOTHER SUPERIOR ADORATION CONVENT' (2021) 5 SCC 602 as well as decision of High Court of Bombay in 'BANDU RAVJI NIKAM Vs. ACHARYARATNA DESHBHUSHAN SHIKSHAN PRASARA MANDAL' (2003) 3 Mhlj 470. Learned Senior counsel also referred to decision of Authority for Advance Rulings, West Bengal in 'BORBHETA ESTATE (P) LTD., IN RE (2019) 106 TAXMANN.COM 386 (AAR - WEST BENGAL). SUBMISSIONS OF RESPONDENTS: 8. On the other hand, learned counsel for the respondents submitted that lessee run ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 148 of the Central Goods and Services Tax At, 2017 (12 of 2017)], the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the inter-State supply of services of description as specified in column (3) of the Table below from so much of the Integrated Tax leviable thereon under Sub-Section (1) of Section 5 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified in the corresponding entry in column (5) of the said Table, namely:- Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent) Condition (1) (2) (3) (4) (5) 13 Heading 9963 or Heading 9972 Services by way of renting of residential dwelling for use as residence Nil Nil LEGAL PRINCIPLES: 10. The issue with regard to interpretation of exemption notification is no longer res integra and the Constitution Bench of the Supreme Court in 'DILIP KUMAR AND COMPANY AND OTHERS while dealing with the reference pertaining to interpretation of an exemption notification, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f reference: 4.13.1 What is a 'residential dwelling'? The phrase 'residential dwelling' has not been defined in the Act. It has therefore to be interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest house, camp - site, lodge, house boat, or like places meant for temporary stay. Thus in the aforesaid education guide issued by Central Board of Indirect Taxes and Customs which contains clarifications, it is provided that in normal trade parlance residential dwelling means any residential accommodation and is different from hotel, motel, inn, guest house etc. which is meant for temporary stay. The aforesaid clarification which is issued by the Board, in the absence of anything to the contrary in the Act, binds the Respondent. 13. It is noteworthy that the accommodation which is used for the purposes of the hostel of students and working women is classified in residential category in the Revised Master Plan 2015 of Bangalore City. The Supreme Court in KISHORE CHANDRA SINGH VS BABU GANESH PRASAD BHAGAT AIR 1954 SC 316 has held that expression residence only connotes that a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption notification are: (i) What is being rented? (ii) The purpose for which the residence is used for. Firstly, the residential dwelling is being rented, as the hostel to the students and working women fall within the purview of residential dwelling as the same is used by the students as well as the working women for the purposes of residence. Secondly, the residential dwelling is being used for the purposes of residence. Thus, the aforesaid questions are required to answered in favour of the petitioner. It is also worth mentioning that the notification does not require the lessee itself use the premises as residence. Therefore, the benefit of exemption notification cannot be denied to the petitioner on the ground that the lessee is not using the premises. Similarly, the finding recorded by AAAR Karnataka that the hostel accommodation is more akin to 'sociable accommodation' is unintelligible and is not relevant for the purposes of determining the eligibility of the petitioner to claim the benefit under the exemption notification. 16. So far as the submission that the petitioner is registered as commercial establishment under the Karnataka Shops and Commercial Es ..... X X X X Extracts X X X X X X X X Extracts X X X X
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