Monthly maintenance charges exceeding Rs. 7,500 subject to full GST; Notification No. 12/2017 exemption not applicable

The Authority ruled that if monthly maintenance charges exceed Rs. 7,500, the entire amount is subject to GST, not just the excess. The exemption under Notification No. 12/2017-Central Tax (Rate) does not apply if charges exceed Rs. 7,500 per month. Therefore, CGST and SGST must be paid on the full maintenance charge amount.

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Issues Involved:
1. Interpretation of exemption limit under Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 2/2018-Central Tax (Rate).
2. GST liability on maintenance charges exceeding Rs. 7,500 per month.

Issue-wise Detailed Analysis:

1. Interpretation of exemption limit under Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 2/2018-Central Tax (Rate):

The applicant, a residential welfare association, sought clarification on whether GST is payable on the entire amount of monthly maintenance charges exceeding Rs. 7,500 or only on the amount in excess of Rs. 7,500. The relevant exemption is provided under Sl.No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, amended by Notification No. 2/2018-Central Tax (Rate) dated 25.01.2018, which states: "Service by an unincorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7,500 per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex."

The applicant argued that GST should be charged only on the amount exceeding Rs. 7,500, citing the language of the notification and supporting documents like CBIC E-Fliers and FAQs from TRU.

2. GST liability on maintenance charges exceeding Rs. 7,500 per month:

The Authority examined the submissions and found that the exemption applies only if the monthly maintenance charges do not exceed Rs. 7,500 per member. If the charges exceed this amount, the entire amount becomes liable to GST. The notification's language does not support partial exemption; it either fully exempts services up to Rs. 7,500 per month or fully subjects services exceeding this amount to GST.

The ruling clarified that if the monthly maintenance charges exceed Rs. 7,500, the entire amount is subject to GST at the applicable rate. The interpretation that only the excess amount over Rs. 7,500 should be taxed was deemed incorrect.

Conclusion:

The Authority ruled that if the monthly maintenance charges payable by a member exceed Rs. 7,500, the entire amount is subject to GST, not just the amount exceeding Rs. 7,500. The exemption under Sl.No. 77 (c) of Notification No. 12/2017-C.T.(Rate) does not apply if the charges exceed Rs. 7,500 per month. Therefore, CGST and SGST at appropriate rates must be paid on the full amount of maintenance charges.

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