Madras High Court: Hostels for Working Men/Women Treated as Residential—Cannot Be Taxed at Commercial Rates

The Madras High Court ruled that hostels providing accommodation for working men and women are residential properties, and cannot be taxed at commercial property-tax, water-tax or electricity-charge rates. 

The judgment arose from petitions by hostel owners in Chennai and Coimbatore, challenging municipal authorities’ reclassification of their hostels to commercial status.

The Court held that the proper test is the end use of the premises, as “sleeping apartments” for working individuals, not the business model of the operator.

As a result, all notices reclassifying such hostels as commercial were quashed, and the authorities were directed to treat petitioners’ properties as residential units for tax purposes.