The Telangana Authority for Advance Ruling( TAAR ) has ruled that rent received from the government social welfare college boys hostel is taxable. It was observed that the applicant is providing renting of buildings to Greater Hyderabad Municipal Corporation ( GHMC ) and in municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC. Therefore these services do not qualify for exemption under Notification No. 12/2017.
The applicant Navya Nuchu is providing building property on rent to the schedule caste development department, Hyderabad District, Government Welfare Departmental Hostels, Government Social Welfare College Boys Hostels ( Govt. SWCBH. ) and they agreed with the Scheduled Castes Development Department, Hyderabad District, Government Welfare Departmental Hostels, Government Social Welfare College Boys Hostel.
The Schedule Caste Development Department provides 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 / Panchayat under article 243W/243G of the constitution of India.
The applicant has sought an advance ruling in respect of the taxability of rent received from the government social welfare college boys hostel. P. Sumalatha, the authorized representative who appeared on behalf of the applicant argued that the applicant provides 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.
It was evident from the contracts entered by the applicant that they are providing their buildings on rent to the Government in urban areas. Therefore, these pure services provided to the State Government shall be by way of any activity in relation to any function of a Municipality under Article 243W of the Constitution.
The two-member bench of the Authority of Advance Ruling comprising S.V. Kasi Visweswara Rao ( Additional Commissioner Commercial Taxes ) and Sahil Inamdar, I.R.S( Additional Commissioner Custom & Indirect Taxes ) observed that 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. Accordingly, rent from the government social welfare college boys hostel is taxable.
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