In Brief
A residential property with 42 rooms in Bengaluru was leased to a company (DTwelve Spaces) that sub-leased rooms to students and working professionals as hostel/PG accommodation. The owner sought GST exemption under Entry 13 of Notification No. 9/2017, which exempts 'renting of residential dwelling for use as residence'. The tax authority denied the exemption, arguing the lessee (company) did not itself use the premises as residence. The High Court allowed the owner's challenge, holding that the exemption applies when the ultimate use is residential, regardless of the lessee's identity. The Supreme Court upheld this decision, ruling that the exemption is activity-specific (renting for residence), not lessee-specific. Since students and professionals actually lived there, the exemption applies despite the intermediary company's involvement. The decision protects residential rental income from GST when ultimately used for residence.
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