The Telangana Authority of Advance Ruling ( AAR ) observed that GST is payable for providing renting services for buildings to government social welfare college boys hostel and in municipalities.
The applicant is providing building property on rent to schedule caste development department, Hyderabad district, Government welfare departmental hostels, Government social welfare college boys hostels ( Govt. SWCBH. ). The applicant is one the opinion that 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 applicant has entered into agreement with the Scheduled Castes Development Department, Hyderabad District, Government Welfare Departmental Hostels, Government Social Welfare College Boys Hostel ( Govt SWCBH ) to rent out the property to run Social Welfare College Boys Hostel.
The applicant has sought advance ruling on whether rent received from the Govt. SWCBH is taxable or not.
The exemption entry at serial no. 3 of notification 12/2017 reads as follows: “Pure services ( excluding works contract service or other composite supplies involving supply of any goods ) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution”.
A Two-Member Bench of the AAR comprising S.V. Kasi Visweswara Rao, Additional Commissioner State Taxes and Sahil Inamdar, Additional Commissioner Central Taxes observed 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 is 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 12th schedule. The Schedule 11 to the constitution of India contains “Education including primary and secondary schools” at serial no. 17.”
“The applicant is providing renting of buildings to GHMC and in municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017” the Bench noted.
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