No Direct Nexus Between Renting Of Buildings To Municipalities & Article 243W, GST Applicable: AAR
Mariya Paliwala
19 Feb 2024 12:15 PM GMT
The Telangana Authority of Advance Ruling (AAR) has ruled that GST is payable for providing renting services for buildings to the Government Social Welfare College Boys Hostel and in municipalities.The bench of S.V. Kasi Visweswara Rao and Sahil Inamdar has observed that the applicant is providing renting of buildings to GHMC and municipalities, and there is no direct relation between...
The Telangana Authority of Advance Ruling (AAR) has ruled that GST is payable for providing renting services for buildings to the Government Social Welfare College Boys Hostel and in municipalities.
The bench of S.V. Kasi Visweswara Rao and Sahil Inamdar has observed that the applicant is providing renting of buildings to GHMC and municipalities, and there is no direct relation between the services provided by the applicant and the functions discharged by the Government Social Welfare College Boys Hostel under Article 243W read with Schedule 12 to the Constitution of India.
The applicant entered into 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. The Scheduled Caste Development Department is providing hostel facilities to students of Scheduled Caste weaker sections and backward classes. They are providing to the State Government pure services by way of any activity in relation to 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 applicant sought the advance ruling on the issue of whether rent received from the Govt. SWCBH is taxable or not.
The applicant submitted that it is providing building property on rent to the schedule caste development department, Hyderabad district, government welfare departmental hostels, and government social welfare college boys hostels (Govt. SWCBH.). They are providing pure services by way of renting the building property to the government, and therefore the same is exempt under entry 3 of Notification 12/2017.
The AAR noted that under serial no. 3 of Notification No. 12/2017, pure services provided “in relation to any function” entrusted to a municipality under Article 243W of the Constitution of India are eligible for exemption from GST. Clearly, the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India, i.e., those functions 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. Therefore, the applicant is not eligible for this exemption.
Case No: TSAAR Order No. 05/2024
