TaxTMI 
TaxTMI 
2019 (11) TMI 224
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....also registered under the Goods and Services Act, 2017. The applicant have sought advance ruling in respect of the following questions: 1) Whether the activity of procuring Goods and Services from third parties for upkeep and maintenance of Apartments and collecting the monies from its members to pay third party vendors is an activity liable to GST? 2) If liable to GST, whether the exemption entry no 77 of notification 12/2017 Central Tax (Rate) dated 28.06.2017 apply for maintenance charges collected from members? 3) If exemption is available, whether it is available on per member basis or per flat basis, as some members could have more than one flat? 4) Whether the exemption as per entry no 77 of Notification 12/2017 Central Tax (Rate) is a standard exemption that can be claimed irrespective of amount collected towards maintenance? i.e. if maintenance charges from a member for a month is Rs. 10,000/-, whether Rs. 10,000/- liable to GST or Rs. 2,500/- (Rs. 10,000 - 7,500) liable to GST? 5) Whether the electricity charges paid to BESCOM (Electricity supply authority) for the power consumed towards common facilities and separately recover....
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....nits in the apartments in respect of common area power consumption and proposed to adopt area of unit in square feet to the total area in square feet of all units as a basis to apportion the common area electricity cost. By following this, the applicant recovers the actual amount incurred towards electricity from each of the units by raising a debit note indicating their share of charges towards electricity. 3.7 The applicant states with regard to the corpus fund / sinking fund that in order to meet any planned or unplanned capital outlay in future, they would also recover certain amounts as "Corpus Fund" or "Sinking Fund" for a specified purpose and the account of such funds would be separately maintained and would be used for the purpose for which such fund is collected and not towards the regular maintenance activity. APPLICANTS VIEW ON QUESTIONS SOUGHT FOR ADVANCE RULING: 4. The applicant, with regard to the activity of procurement of goods and services from third parties for upkeep and maintenance of apartments and collection of monies from its members to pay third party vendors & the GST liability thereon, submits that the association is no different person to the me....
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.... of the exemption entry and states as under: (a) Service should be from an unincorporated body or a non-profit entity to its members This condition is satisfied by the applicant as it is formed to meet the common expenses for the upkeep and maintenance of the premises and not to make profit out of its members' contribution, though there could be a temporary surplus of funds sometimes. (b) Exemption upto Rs. 7,500-00 per month per member Wordings used in the entry is "upto Rs. 7,500/- per month". The applicant is of the view that the exemption of an amount upto Rs. 7,500/- would be allowed i.e. if the maintenance charge is Rs. 10,000/-, an amount upto Rs. 7,500/- is exempted and only the balance of Rs. 2,500/- is taxable. They have taken the example of Income Tax Slabs in support of their contention. (c) The applicant also place reliance on the extract of e-flier on Co-operative Housing Societies released by the CBIC, which clarifies that on the amount in excess of the exemption limit would be taxable. 7. The applicant contends with regard to applicability of exemption to members on per member basis or per flat basis, if available ....
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.... amount of Rs. 5,000/- per month per member, collected for the maintenance activities. Subsequently the same was amended by the Notification No. 2/2018-Central Tax (Rate) dated 25-01-2018 increasing the exemption limit to Rs. 7,500/- per month per member. Therefore in case if the maintenance charges collected exceeds the Rs. 7,500/-, the balance in excess of Rs. 7,500/- only is liable to GST. 11. FINDINGS & DISCUSSION: 11.1 We have considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri Chandrashekhar B D, Chartered Accountant appeared during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 11.2 The applicant seeks advance ruling in respect of the questions mentioned at para 2 supra. We proceed....
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....on or reimbursement of charges. (c) The recipients of services provided by the applicant are its own members i.e. members of a residential complex. In view of the above, the exemption under entry number 77 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 2/2018 - Central Tax (Rate) dated 25.01.2018 is available for an amount, up to Rs. 7,500/- per month per member, collected for sourcing of goods or services from a third person for common use of the members. 11.6 The third question relates to the applicability of the aforesaid exemption, whether it is per member basis or per flat basis. In this regard we draw attention to the Circular No. 109/28/2019-GST dated 22.07.2019 wherein the instant issue has been clarified at para 1, issue number 4, and the same is as under: As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the Residential Welfare Association (RWA) for each residential apartment owned by him separately. The ceiling of Rs. 7,500/- per month per member shall be applied separately for each residen....
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....t note indicating the proportionate electricity charges The electricity bill received in relation to the consumption of electricity for the common utilities is in the name of the applicant. The applicant is not involved in the supply of electrical energy to the members but is involved in providing the service of upkeep and maintenance of the common utilities of the apartments and for this the electricity consumed by them becomes an input. Though the electricity bill is distributed to all its members, it is not the consideration for the supply of electrical energy to the members but the value is a part of the consideration for the supply of services to its members and hence is liable to tax at appropriate rates. Hence this value of electricity charges separately shown in the invoices is to be added to the considerations shown towards the same service of upkeep and maintenance charged to individual members and then the consideration for the supply of such service is to be arrived and the taxable value shall be determined. 11.9. The sixth question is related to applicability of tax on the Corpus / Sinking Fund. The applicant collecting the amounts towards corpus / sinking fun....