In re Liberty Square Apartment Owners Association (GST AAR Karnataka)
The applicant, a residential apartment owners’ association registered under the Karnataka Apartment Ownership Act, 1972, manages the common affairs of a residential complex and collects monthly maintenance charges from members to meet recurring expenses such as staff salaries, housekeeping, maintenance of common areas, and utilities. In addition to these charges, the association also collects contributions toward a corpus fund or sinking fund intended to meet future contingencies and major capital expenditures, including structural repairs, repainting, lift replacement, and infrastructure upgrades.
The applicant sought an advance ruling on whether corpus fund contributions collected from members constitute “consideration” under the Goods and Services Tax (GST) law and whether GST is applicable on such collections. The applicant also asked whether the corpus fund should be treated separately from monthly maintenance charges, whether GST would be payable at the time of collection or at the time of utilization, and how the time-of-supply provisions would apply.
The applicant contended that corpus fund contributions do not represent consideration for any specific supply of goods or services and therefore fall outside the scope of “supply” under Section 7 of the CGST Act, 2017. It argued that these contributions are voluntary, non-recurring, and intended to serve as reserves for future contingencies. The applicant also relied on the principle of mutuality, claiming that the association and its members are effectively the same entity, meaning that contributions from members constitute pooling of resources rather than payments for services.
