GST on maintenance deposit collected from prospective flat buyers during construction period by the Builder

[GANESH KANCHAN]

GST department has issued notice to the Builder to discharge duty on "Maintenance Deposit" appearing on the liabilities side of the Balance Sheet,. In fact maintenance deposit is collected from prospective flat buyers during construction period. Pending formation of Society/Association, builder keep this fund/deposit in a separate account. Once the Association is formed/registered, such deposit amount shall be transferred to Association account. is the GST officer is correct ? Your views with citation if any.

AI Summary

Maintenance deposits held for flat purchasers remain outside GST unless appropriated as consideration for the builder's maintenance services.
GST treatment of a maintenance deposit depends on whether it is a genuine deposit or corpus fund rather than consideration for maintenance services. Mere collection, liability-side accounting, and retention pending formation of a Society or Association do not create GST liability where the builder does not appropriate the amount as income and transfers it to the Society or Association. GST exposure may arise if the amount is advance maintenance charges or is used towards maintenance services supplied by the builder.