The High Court of Jammu and Kashmir,held the Home Ministry liable to pay Goods and Service Tax (GST) in addition to the fixed rent for hotel accommodation rented from the petitioner.

Mushtaq Ahmad Bhat,petitioner-assessee, had his case covered by the judgment in writ petition WP(C) No. 1154/2024, which was applied to this case too.

The facts in WP(C) No. 1154/2024 showed that the petitioner owned Hotel Boulevard in Srinagar and rented it to the Police Department to accommodate Central Security Forces. The rent was fixed at Rs. 300 per day per room in 2013 without any increase since then. Other hoteliers also requested a rent increase, but the Government took no action.

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The hoteliers filed petitions in 2016, and in 2019, the Court ordered the Government to form a Rent Assessment Committee to review the rent.

The petitioner accepted paying GST on the rent but claimed that the Government should pay the GST amount in addition to the fixed rent. The GST authorities argued that under the Jammu and Kashmir GST Act, hotel stays with tariffs below Rs. 1,000 were exempt from GST until July 13, 2022. After that, the exemption was removed, and GST at 12% became applicable.

Since the petitioner charged Rs. 300 per room per day, GST at 12% was due from July 18, 2022. The petitioner was responsible for charging and depositing the GST, while the Police Department was liable to pay the GST amount. The Department of Home did not respond separately.

The petition raised two main questions: whether the landlord’s rental income from hotel accommodation was liable for GST, and if yes, whether the tenant, the Department of Home, was required to pay the rent along with the GST to the landlord.

The court heard the parties and reviewed the case. It considered whether rental income from hotel rooms was subject to GST and if the Department of Home had to pay GST along with rent.

The court noted that since GST started in 2017, rental income from commercial properties like hotels became taxable at 12%. It said the landlord had to collect and pay GST to the authorities. It rejected the argument that GST could not be charged because the rent was fixed before GST was introduced. It explained that the rent was set before 2017, but now GST applied to that income.

The bench ruled that the Department of Home had to pay GST in addition to rent. The landlord had to register for GST, collect it from the Department, and deposit it with the government.

Justice Sanjeev Kumar and Justice Sanjay Parihar ordered that from August 2025, the Department of Home must pay GST with rent, and the landlord had to complete GST registration by July 31, 2025. It also suggested revising the rent through a new committee.

The petition was disposed of on these terms.

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