Court rules GST payable on member contributions exceeding Rs. 7,500, applies to specific funds, water supply, limits input tax credit.

Outcome: The court held that GST is payable on contributions received from members, and if the monthly contributions exceed Rs. 7,500, GST is leviable on the entire amount. Additionally, GST is applicable on amounts collected for specific funds like the Sinking Fund, Building Repair Fund, and Election and Education Fund. Exempt supplies should be excluded when computing the Rs. 7,500 threshold, and contributions for water supply are taxable. Input Tax Credit on heavy repairs and maintenance expenses is not available to the extent of capitalization.

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Issues Involved:
1. Liability to pay GST on contributions received from members.
2. Exemption under entry no. 77 of Notification no. 12/2017-CTR.
3. GST applicability on amounts collected towards specific funds.
4. Inclusion of exempt supplies in computing the threshold amount.
5. Taxability of contributions for water supply under entry 99 of Notification 2/2017-CTR.
6. Eligibility for input tax credit on heavy repairs and maintenance expenses.

Detailed Analysis:

1. Liability to Pay GST on Contributions Received from Members:
The applicant argued that based on the principle of mutuality, the society and its members are not distinct persons, and thus transactions between them should not be taxable. However, the judgment clarified that under the GST regime, the taxable event is the 'supply' of goods or services. The amendment to Section 7 of the CGST Act, 2017, deems activities or transactions between a person and their members to be supplies, thus making them taxable. The judgment concluded that the society and its members are distinct persons, and contributions received are considered as consideration for services, making them liable to GST.

2. Exemption Under Entry No. 77 of Notification No. 12/2017-CTR:
The applicant sought exemption for contributions up to Rs. 7,500 per month per member and argued that GST should be levied only on the amount exceeding Rs. 7,500. The judgment referred to the Circular No. 109/28/2019-GST, which clarified that if the contribution exceeds Rs. 7,500, the entire amount is taxable. Despite the applicant citing a contrary Madras High Court ruling, the judgment noted that the decision has been stayed and thus held that contributions exceeding Rs. 7,500 are fully taxable.

3. GST on Amounts Collected Towards Specific Funds:
The applicant contended that amounts collected for the Sinking Fund, Building Repair Fund, and Election and Education Fund are deposits and not consideration for services. The judgment disagreed, stating these funds are collected as per the society's bye-laws and are not refundable, thus constituting consideration for services. Therefore, these amounts are liable to GST.

4. Inclusion of Exempt Supplies in Computing Threshold Amount:
The applicant argued that supplies exempt from GST should not be included in computing the Rs. 7,500 threshold. The judgment agreed, stating that charges collected for property tax, electricity, and other statutory levies, which are exempt from GST, should be excluded when calculating the threshold limit.

5. Taxability of Contributions for Water Supply Under Entry 99 of Notification 2/2017-CTR:
The applicant claimed that contributions for potable and non-potable water supply should attract NIL GST under entry 99. The judgment clarified that the applicant is providing a service of water supply rather than selling goods per se. Therefore, the provisions of entry 99 of Notification 2/2017-CTR are not applicable, and such contributions are not exempt from GST.

6. Eligibility for Input Tax Credit on Heavy Repairs and Maintenance:
The applicant sought to claim ITC on expenses for heavy repairs and maintenance that are not capitalized. The judgment referred to Section 17(5) of the CGST Act, which restricts ITC on works contract services for construction of immovable property to the extent of capitalization. It concluded that ITC is not available for such expenses to the extent they are capitalized.

Order:
1. GST is payable on contributions received from members.
2. If monthly contributions exceed Rs. 7,500, GST is leviable on the entire amount.
3. GST is applicable on amounts collected for Sinking Fund, Building Repair Fund, and Election and Education Fund.
4. Exempt supplies should be excluded when computing the Rs. 7,500 threshold.
5. Contributions for water supply are not covered under entry 99 of Notification 2/2017-CTR and are taxable.
6. ITC on heavy repairs and maintenance expenses is not available to the extent of capitalization.

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