In re Vishal Cooperative Housing Society Limited (GST AAR Maharashtra)
According to circular number 109/28/2019-GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. The society claims exemption of INR 7,500 available to residential unit and hence, it does not claim ITC on various services availed such as professional fees, bank charges, insurance premium, stationery items purchased, repair and maintenance, security charges, Cable Services etc. Please provide your opinion whether the society can claim ITC on these services either fully or proportionately despite of availing exemption available to residential units.
Answer:- Society can claim ITC on the input services, proportionately, as mentioned in Explanation of Section 17(2) of the CGST Act, 2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s. VISHAL COOPERATIVE HOUSING SOCIETY LIMITED, the applicant, seeking an advance ruling in respect of the following questions. The application is as under:
1. According to circular number 109/28/2019-GST dated 22 July 2019, Resident Welfare Association (RWA) shall be required to pay GST on monthly subscription contribution charged from its members, only if such subscription is more than INR 7,500 per month per member and aggregate annual turnover of RWA by way of supplying services and goods is also INR 20 Lakhs or more. In case of the society, though annual turnover is more than INR 20 Lakhs, monthly maintenance per month per member is less than INR 7,500. But the society also has 68 commercial shops, 233 residential flats and 18 garages. Hence, the society does not contain only residential flats. In view of this please confirm whether the society can stop paying GST and surrender the registration.
According to circular number 109/28/2019-GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. But as per section 17 (5)(c), ITC shall not be available, when works contract services supplied for construction of immovable property (other than plant and machinery except where it is an input service for further supply of works contract service. Collective reading of notification and section 17(5)c), gives contradiction picture to the extent of major repair work carried out with respect to immovable property. Hence, the society wants to understand if the registration is to be continued then whether the society can claim ITC on repairs both major as well as minor.
3. According to circular number 109/28/2019-GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. The society claims exemption of INR 7,500 available to residential unit and hence, it does not claim ITC on various services availed such as professional fees, bank charges, insurance premium, stationery items purchased, repair and maintenance, security charges, Cable Services etc. Please provide your opinion whether the society can claim ITC on these services either fully or proportionately despite of availing exemption available to residential units.
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression `GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION — AS PER THE APPLICANT
Submissions made by Vishal Cooperative Housing Society Limited, the applicant, are as under:-
2.1 The applicant society does not charge contribution towards maintenance more than INR 7.500 per member per month (previous limit of INR 5,000 till 25th January 2018) to any commercial shop or residential unit or Garage. In case of residential flat, the society does not charge GST on amount collected towards government dues (such as property tax, education fund, etc.), claims exemption towards reimbursement (such as maintenance charges, central service charges, etc.) and charges GST on flat specific contribution (such as repair and maintenance fund, contribution towards sinking fund, interest on arrears, parking charges, etc.). In case of commercial shop and gurages, society does not charge GST on amount collected towards government dues (such as properly lax, education fund, etc.). Society charges GST on reimbursements as well as flat specific contributions without claiming exemption of INR 7,500 per member per month as this expectation is applicable to residential unit only. Further, society also collects GST contribution toward major repair fund. The Society does not claim input tax credit on regular expenses such as professional fees, bank charges, insurance premium, stationery items purchased, repair and maintenance, security charges, etc. The society has claimed proportionate ITC once only pertaining to GST charges on major repair bill received from the contractor.
B. Statement containing the Applicant’s interpretation of law and /or facts
1. As per circular number 109/28/2019-GST dated 22 July 2019, Resident Welfare Associations (RWA) shall be required to pay GST on monthly subscription contribution charged from its members, only if such subscription is more than INR 7,500 per month per member and aggregate annual turnover of RWA by way of supplying services and goods is also INR 20 Lakhs or more. In case of the society, though annual turnover is more than INR 20 Lakhs, monthly maintenance per month per member is less than INR 7,500. In applicant’s view GST should be charged only on Commercial Premises and Residential premises should be able to claim Exemption.
2.2 According to circular number 109/28/2019-GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. But as per section 17(5)(c), ITC shall not he available, when works contract services supplied for construction of immovable property (other than plant and machinery) except whether it is an input service for further supply of works contract service. Collective reading of notification and section 17(5)(c), gives contradiction picture to the extent of major repair work carried out with respect to immovable property. In applicant’s view the society should be able to claim ITC as the society pays GST on output services.
2.3 As per circular number 109/28/2019-GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods, goods and input services. The society claims exemption of INR 7,500 available to residential unit and hence, it does not claim ITC on various services availed. In applicant’s opinion, it should be able to claim ALL ITC as the society pays GST on output services.
APPLICANT SUBMISSION DATED 24.08.2021:-
2.4 Point number 1— Surrendering of GST registration
