Srinagar:The High Court of J&K and Ladakh on Tuesday directed Home Department, J&K to reimburse GST and constitute a proper Rent Assessment Committee to revise the rental in respect of the hotel accommodations it has taken on rent for the last several years.
The direction came in response to a petition filed by one Iqbal Mubarik, owner of a hotel by the name of Hotel Boulevard situated at Dalgate, Srinagar.
As per the plea, the hotel premises owned by the petitioner are rented out to the Police Department of the Government of Jammu and Kashmir for the purpose of accommodating the Central Security Forces who are engaged in maintaining law and order in Kashmir.
The grievance projected by the petitioner is that, on one hand, the government is reluctant to revise the per day per room rental fixed way back in the year 2013, and on the other hand the GST authorities have raised a demand under the Jammu and Kashmir Goods and Services Tax Act, 2017.
The petitioner submitted that he does not dispute his liability to pay the GST on the per day rental income derived by him by hiring his hotel rooms to the government but he also stated that the GST must be reimbursed/paid in addition to the fixed rent by the government.
Justice Sanjay Parihar and Justice Sanjeev Kumar while hearing the plea recorded that with the implementation of Goods and Services Tax regime in the year 2017, and the coming into force of the Central Goods and Service Tax Act, 2017 (CGST Act) and the Jammu and Kashmir Goods and Services Act, 2017 (J&K GST Act), it brought significant transformation in the taxation laws, particularly in relation to rental income.
“Renting a property, whether residential or commercial, is classified as a supply of services taxable under the GST regime,” court noted and said “there should be no dispute that the liability to collect the GST on the services supplied is on the supplier of the services and shall arise at the time of supply of goods and services as determined in accordance with Section 12 of the Jammu and Kashmir GST Act.”
The court said it is in view of this admitted position of law that the petitioner has not contested the claim of the GST authorities to demand GST @ 12% on the rental income by the petitioner on account of hotel accommodation hired by the Department of Home.
Court noted that with the implementation of GST regime and enforcement of Central CGST Act and Jammu and Kashmir GST Act, the income derived by the petitioner and other hoteliers, who had rented out their hotel accommodation to Government for accommodating its security forces, is now taxable @ 12%.
“We also cannot lose sight of the fact that despite repeated requests and representations made by the hoteliers similarly situated with the petitioner, the rent has not been revised since 2013,” court mentioned.
The Bench said, “Be that as it may, the fact remains that the rental income received by the petitioner and other similarly situated hoteliers is now exigible to GST and, therefore, it is the liability of the Department of Home to reimburse such amount.”
Court said taking the overall view of the matter and the nature of controversy projected by the petitioner, we propose to dispose of the petition by directing that the petitioner is liable to pay GST on the rental income which he is receiving from the Department of Home in respect of the hotel accommodation of petitioner hired by the Department of Home.
“The petitioner, therefore, shall be legally bound to seek appropriate registration under the CGST/Jammu and Kashmir GST Act and deposit the service tax at the prescribed rate with the GST authorities,” Court said.
Court also directed that the Department of Home, Government of Jammu and Kashmir, shall be liable to pay the prescribed rate of GST in addition to the rent payable to the petitioner per room per day as determined by the Government from time to time.
Court also said that it shall be a right time for the Department of Home to constitute a proper Rent Assessment Committee to revise the rental in respect of the hotel accommodations it has taken on rent for the last several years.
It directed that that the Department of Home shall, with effect from August, 2025, start paying the GST in addition to the rental payable to the petitioner, and the petitioner shall immediately and without any further waste of time seek its registration under the Act to enable him to collect the GST from the Department of Home and deposit the same with the GST Authorities.
“Needless to say, this registration process shall be completed by the petitioner before 31st July, 2025,” Bench directed.
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