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answer is no. Hostel accommodations are basically, somebody then it will be for the purpose of business
and for all practical purposes residential units given so it can be taxable, but the person taking the whole
to students in 80 to 90% cases and used by working building on rent shall not be able to collect the GST
women, training as pirants etc coming from from the persons occupying those units because this
outstations in other cases. The basic purpose and will be a unit rented for residential use purpose
intention of these hostels is for residential services attracting Nil rate of GST.
with other activities like food being ancillary, unlike So finally, the rooms or accommodations rented by
the case in hotels which are being taken on rent for
hostels are residential units as also clarified by the
business meetings and social functions like birthdays honourable HC of Karnataka in case of 2022-TIOL-
and marriages. 242-HC-KAR-GST.
As per Sr. no. 12 under Notification No. 12/2017- Interestingly in case of mother superior adoration
Central Tax (Rate) dated 28th June'2017 which
convent trust 2021-TIOL-156-SC-MISC matter the
mentions “Services by way of renting of residential honourable Supreme Court has said that the
dwelling for use as residence” attracts Nil rate of GST purpose of the exemptions should be taken with
seems to be applicable for proper hostel units
wide and lenient view. If the exemption is qua
asthese are given on rent for residential purpose. service, then it can be never qua supplier or receiver.
Also, Section 7 of the CGST Act, 2017 states that the The usage test was upheld by the apex court.
supply of services in this case being rental services Foods supplied by Hostels-Stay is the main supply;
should be in the course or furtherance of business. If
supply of foods or breakfast is an incidental activity
somebody is giving hostel rooms on rent basis but is and forms part of Composite Supply where the rule
not for business then there cannot be a taxable
of major or principal supply will prevail. The principal
activity. If the hostel building itself is rented to
supply here being renting for residential purpose,
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If something is not t 001
The purpose of our lives is to be happy.axable at all then how can it be exempted.
