The Tamil Nadu Authority of Advance Ruling (AAR) has ruled that leasing out of the premises to an educational institution for imparting higher education is a taxable supply of service and attracts GST.
The bench of C. Thiyagarajan and B. Suseel Kumar has observed that the agreement for lease is entered between two educational institutions and the payment is made by one institution to the other. Moreover, it is clear that the applicant is not providing the accommodation service directly to the individual students, in order to claim exemption as prescribed under Sl.No.12A of the exemption Notification No.12/2017-Central Tax (Rate), dated 28.06.2017, as amended. Leasing out of the premises by the applicant to the recipient college is a taxable supply of service and attracts GST.
The applicant, M/s KLN Sourashtra College Of Engineering is a registered Educational Trust engaged in providing higher education to Students and also educational services, transportation services, Mess Services and Hostel Services to the Students.
The Applicant has entered into an agreement to accommodate the girl students of an educational institution imparting higher education, in the Hostel of the applicant, as there is no accommodation for the girls students in the other College.
The Applicant has stated that the agreement is between the two educational institutions and not between the Service Provider and the Students of the other College. So, it has been stated that one Educational Institution will have to raise bill in favour of the other Educational institution and not on the Students.
The applicant sought the advance ruling on various issues in respect of the present position for levy of GST on hostels for poor and middle class students run by charitable Trusts.
The AAR held that Hostels run by Trusts can claim exemption under SI No. 12A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, provided the conditions prescribed therein are fulfilled. Supply of food by the applicant to students of other educational institutions imparting higher education is a taxable supply of service and attracts GST.
Ruling Details
Applicant’s Name: K L N Sourashtra College of Engineering Council
Ruling Date: 25.09.2025
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