Court rules against commercial tariff on hostels

The Madras High Court has delivered a significant ruling clarifying that hostels used for residential purposes by working professionals and students cannot be classified as commercial properties.

- HD Bureau

The decision means such hostels are not liable for commercial tariff rates on utilities and property taxes, effectively overturning previous demands for payment issued by local authorities in Chennai and Coimbatore.

Justice Krishnan Ramasamy, in his judgment, quashed the tax demand notices that had been served to several hostels in the two cities. The notices had instructed the hostel managements to pay taxes at commercial rates, a move that had sparked protests from hostel operators, who argued that their establishments should be treated as residential properties rather than commercial enterprises.