Residential project water supply deemed part of maintenance services, subject to GST

The Authority ruled that the supply of water to individual units in the residential project under the MOU is not a separate supply of goods but is part of the maintenance services provided by the facility management entity. The Authority found that the attempt to separate water supply from maintenance services was to avoid GST implications, and as such, the applicant is required to pay GST as applicable on maintenance services.

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Issues Involved:
1. Whether the supply of water to individual units in the project under the MOU is a separate supply of goods or a composite/mixed supply with that of maintenance services.
2. If such supply is a separate supply of goods, what is the appropriate rate of GST chargeable thereon.

Issue-wise Detailed Analysis:

1. Whether the supply of water to individual units in the project under the MOU is a separate supply of goods or a composite/mixed supply with that of maintenance services:

The applicant, a facility management entity, provides maintenance services for common areas in residential projects and charges GST for these services. The applicant also enters into a separate MOU with residents for the supply of water through tankers until the Haryana Shahari Vikas Pradhikaran (HSVP) develops the necessary infrastructure. The applicant argues that the supply of water under the MOU is separate from the maintenance services provided under the Maintenance Agreement.

However, the Authority observed that the water is supplied to the Residential Welfare Association (RWA) and then distributed to individual flats through common storage tanks. The supply of water, whether for maintenance activities or individual units, is from the same source and cannot be bifurcated. The Authority concluded that the supply of water and maintenance services are the same supply, and the applicant's attempt to bifurcate them is to avoid GST implications.

2. If such supply is a separate supply of goods, what is the appropriate rate of GST chargeable thereon:

The Authority noted that GST on services provided by RWAs to their members is 18% if the monthly charges exceed Rs. 7500 per unit and the annual turnover exceeds Rs. 20 lakhs. The applicant's attempt to separate the water supply from maintenance services is seen as an effort to keep charges below this threshold to avoid GST. The Authority found that the water charges collected are based on the size of the flats, similar to maintenance charges, indicating that the supply of water is not separate from maintenance services.

Ruling:

The Authority ruled that the Maintenance Agreement and MOU are directly linked, and there is no case of direct supply of water by the applicant to individual residents. The supply of water to individual units is not different from the supply of water for maintenance services. Therefore, the applicant is required to pay GST as applicable on maintenance services.

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