In re Mahindra Splendour CHS Ltd (GST AAR Maharashtra)
Question 1:- Whether the applicant is liable to pay GST on the contribution received from its members?
Answer: – Answered in the affirmative.
Question 2:- If yes, whether the applicant can avail the benefit of exemption under entry no. 77 of Notification No. 12/2017-CTR dated 28.06.2017 for the value upto Rs.7, 500/- per month per member and in case the said monthly contribution exceeds Rs. 7,500/- per month, then the GST is leviable only on differential value in excess of Rs. 7,500/-?
Answer: – In view of the discussions made above, in case the said monthly contribution exceeds Rs.
7,500/- per month, then the GST is leviable on the entire value of the monthly contribution collected.
Question 3:- Whether the applicant is liable to pay GST on amount collected from its members towards the following accounts as per the Bye laws:-
a. Sinking Fund
b. Building Repair Fund
c. Election and Education
Answer:- Fund GST is applicable as discussed above.
Question 4:- Whether the supplies otherwise exempted from tax or charged at Nil rate shall be included in value in computing threshold amount of Rs.7, 500/- per month per member under entry no.77of Notification No. 12/2017-CTR dated 28.06.2017, for determining the tax liability?
Answer:- Thus, charges, collected by the society on account of property tax, electricity charges and other statutory levies would only be excluded while calculating the threshold limit of Rs. 7,500/-.
Question 5:- Whether contribution collected to defray expenses for supply of following types of water are covered under entry 99 of notification 2/2017-ctr i.e. under HSN Code 2201 and attracts NIL rate of tax?
a. For Potable water received from MCGM u/s 169 of Mumbai Municipal Corporation Act 1888, which is supplied/distributed to the flats of the Members through an elaborate storage and pumping system.
b. Flush Water (Non Potable water) generated from Sewage treatment plant installed in the Society premises and supplied to all the flats for use in toilet flushing.
Answer:- The provisions of entry 99 of notification 2/2017-ctr is not applicable in the instant case.
Question 6:- Whether input tax credit can be claimed on the expenses incurred for heavy repairs and maintenance of the society building premises and which are not capitalized in books of accounts?
Answer: – In view of the discussions made above, ITC on the expenses incurred for heavy repairs and maintenance of the society building will not be available to the extent of capitalisation as mentioned in Explanation of Section 17(5) of the CGST Act, 2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARSHTRA
PROCEEDINGS
(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 Mahindra Splendour CHS Ltd , the applicant, seeking an advance ruling in respect of the following questions.
1. Whether the applicant is liable to pay GST on the contribution received from its members?
2. If yes, whether the applicant can avail the benefit of exemption under entry no. 77 of Notification no. 12/2017-CTR dated 28th June, 2017 for the value upto Rs.7,500/- per month per member and in case the said monthly contribution exceeds Rs. 7,500/- per month, then the GST is leviable only on differential value in excess of Rs. 7,500/-?
3. Whether the applicant is liable to pay GST on amount collected from its members towards the following accounts as per the Bye laws:-
a. Sinking Fund
b. Building Repair Fund
c. Election and Education Fund
4. Whether the supplies otherwise exempted from tax or charged at Nil rate shall be included in value in computing threshold amount of Rs.7,500/- per month per member under entry no. 77 of Notification no. 12/2017-CTR dated 28th June, 2017, for determining the tax liability?
5. Whether contribution collected to defray expenses for supply of following types of water are covered under entry 99 of Notification no. 12/2017-CTR dated 28th June, 2017 i.e. Under HSN code 2201 and attracts NIL rate of tax?
a. For Potable water received from MCGM u/s 169 of Mumbai Municipal Corporation Act 1888, which is supplied/distributed to the flats of the Members through an elaborate storage and pumping system.
b. Flush Water (Non Potable water) generated from Sewage treatment plant installed in the Society premises and supplied to all the flats for use in toilet flushing.
6. Whether input tax credit can be claimed on the expenses incurred for heavy repairs and maintenance of the society building premises and which are not capitalized in books of accounts?
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:
The submissions made by the applicant are as under:-
2.1 M/s Mahindra Splendour Co-operative Housing Society Ltd, the Applicant is a housing society whose main objects include: managing, maintaining and administering its property: raising funds for achieving the said objects etc., by way of collecting contributions/charges from members of the society, like Property taxes, Maintenance charges, Water and electricity charges, Sinking and Building repair Fund, Club House charges, Interest on delayed payment, etc.
2.2 Applicant procures goods and services from third party vendors for maintenance its property. No other activity other than those mentioned in the bye laws is carried out.
2.3 Contribution of charges from members is outside purview of GST on the principles of mutuality. A harmonious reading of the provisions of the CGST Act, 2017 viz. Section 9, Section 7 Section 2(17) Section 2(31) Section 2(105) and Section 2(93), etc., determines that where consideration is involved in a transaction, the recipient is the “person” who pays consideration to the supplier. Hence, 2 different persons have been envisaged in the law to tax a transaction of supply of goods or services or both in course of business or furtherance of business made for a consideration.
2.4 However, nowhere under the GST Act, the members and the society are treated as distinct persons. Therefore, the society and its members are not distinct person. Hence, the impugned transaction between the association and its member do not get covered under section 7(1)(a) of The Act and the contribution / fund raised from the members is collected for benefit of all the members and to foster society’s objectives.
2.5 Applicant, in support of the applicability of the principle of mutuality in its case, are relying on the following decisions:-
i. Hon’ble Jharkhand High court in case of Ranchi Club Ltd. v. Chief Commissioner;
ii. Hon ‘ble Mumbai CESTA T in case of Cricket Club of India Ltd. v. Commr of Service Tax;
iii. Hon’ble Gujarat High Court in the case of Sports Club of Gujarat Ltd v. UOI;
iv. Hon’ble Supreme court in case of STATE OF WEST BENGAL & ORS Vs. M/S CALCUTTA CLUB LTD/RANCHI CLUB LTD;
v. Hon’ble Mumbai CESTAT in case of M/s Tahnee Heights CHS Ltd Vs. Commissioner of CGST, Mumbai South
2.6 Since the concept of mutuality was upheld by Larger Bench of Hon ‘ble Supreme Court during the service tea regime, the same principle will also be applicable in the GST regime, as there is no change in the legal position. Further, there is nothing contrary to the above decision of Hon’ble Apex Court in the case of M/s Calcutta Club Ltd and as per Article 141 of the Constitution of India, the law declared by the Supreme Court shall be binding on all Courts within the territory of India.
2.7 Applicant states that under service tax there was a deeming clause i.e. “An unincorporated association or a body of person, as the case may be, and a member thereof shall be treated as distinct person”. The said clause is absent under GST. The intent in GST was never to treat society and members are separate persons.
2.8 The applicant also places reliance on the decisions of the Hon’ble Maharashtra Advance Appellate Authority in following cases:-
