TaxTMI 
TaxTMI 
2020 (2) TMI 435
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....Splendour Homeowners Welfare Association, (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 47/2019 Dated: 17 sept 2019 = 2019 (11) TMI 155 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The appellant is an association of apartment owners in the condominium known as "Vaishnavi Splendour". The association has 88 members and each of them contribute towards the maintenance of common areas/ facilities, lightings in the common areas, water, etc. The contributions of each member work out to more than Rs. 7500 per month. 4. The appellant filed an application for Advance Ruling under section 98 of the CGST Act, 2017 and KGST Act,2017 on the following question: (i) Whether the applicant is liable to pay CGST and SGST on the amount of contribution received from its members? (ii) If yes, whether it can avail the benefit of Notification No 12/2017 CT(R) dt 28.06.2017 (SI.No. 77) read with Notification No 02/2018 dt 25.01.2018 which provide for exempting from tax, the value of supply upto an amount of Rs. 7500/- per month per member? (iii) lf the answer to (ii) is 'yes', whether it is required to restrict its claim of input tax c....
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....ce of privity of contract between the supplier and the recipient. When the members' association effects any supplies to its members, the supplier and the recipient are one and the same and therefore, there is an absence of privity of contract. Accordingly, there cannot be any charge of GST on such transactions. 6.3. Appellant further submitted that the Authority for Advance Ruling is a quasi-judicial authority; that quasi- judicial authorities are bound to decide the matters independent of departmental circulars; that departmental circulars clarifying the departmental stand on the matter cannot be the basis for the decision by the authority. Yet, Authority has given the ruling by merely following the CBIC Circular No. 109/28/2019-GST dated 22-07-2019. They contended that the ruling given by merely quoting the circular is not a speaking ruling. 6.4. They submitted that departmental circular would operate only prospectively by virtue of being in the nature of an oppressive circular. They relied on the Supreme Court judgments in the case of Commissioner of Central Excise vs Mysore Electricals Industries Ltd (Civil Appeal 4488/2005) = 2006 (11) TMI 202 - SUPREME COURT and Suchitra Co....
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....able. 7.3. The Appellant has placed reliance on the decision of the Honourable Supreme Court in the case of State of West Bengal vs. Calcutta Club Limited reported in Civil Appeal No. 4184 of 2009 which was decided on 03-10-2019 = 2019 (10) TMI 160 - SUPREME COURT wherein the Hon'ble Supreme Court observed as under: "3. It was contended before the tribunal that there could be no sale by the respondent club to its own permanent members, for doctrine of mutuality would come into play. To elaborate, the respondent club treated itself as the agent of the permanent members in entirety and advanced the stand that no consideration passed for supplies of food, drink or beverages, etc. and there was only reimbursement of the amount by the members and therefore, no sales tax could be levied": Thus, the Honourable Supreme Court made it clear that the Constitution of India doesn't enable the State Legislature or the Parliament to make any law by which members' contributions to their association can be made taxable. 7.4. In the light of the above, the appellant submitted that the activity of managing and maintaining the common areas and facilities by receiving contributions from their mem....
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....rding the availment of benefit of Notification No.12/2017 dated 28-06-2017 as amended vide notification No.2/2018 dated 25-01/2018, the said Notification provides for exemption from tax, the value of supply up to an amount of Rs,7500 per month per member. In this regard, they stated that Homeowners Associations enjoyed exemptions from tax even in the service tax regime. In this regard they referred to the Notification No 08/2007 - Service Tax dated 01.03.2007 where the taxable services provided by a resident welfare association was exempted from the whole of service tax provided the total consideration received from individual members does not exceed Rs. 3000 per month. Further, Notification No 25/2012-ST dated 20.06.2012 exempted from service tax contributions upto an amount of Rs. 5000 per month per member; an analysis of the above Notification reveals that contributions which was less than Rs. 5000 per month per member was fully exempted from tax while contributions which was more than Rs. 5000 per month per member were exempted upto Rs. 5000 and tax was required to be paid on amounts which was over and above 5000. They contended that under GST, the exemption was continued on th....
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.... Aarthi vs M. Abdul Kapoor (CRP (NPD) (MD) No 475/2004 and CRP (NPD) (MD) 476/2004 = 2009 (1) TMI 919 - MADRAS HIGH COURT wherein it is held that if a thing is prescribed to be done within a particular period, it shall be done within that period or shall not be done at all. In view of the above grounds, the Appellant prayed that the ruling passed by the Authority in their case be set aside. DISCUSSIONS AND FINDINGS 8. We have gone through the records of the case and considered the submissions made by the Appellant in their grounds of appeal, at the time of personal hearing as well as in their additional submissions. 9. There are two issues to be decided by us, viz: Whether the activities of the association of apartment owners are liable to tax under GST as a supply? If so, whether in terms of entry No.77 of the Notification No. 12/2017- Central Tax (Rate) Dated 28-06-2017 as amended by the Notification No.02/2018-CentraI Tax (Rate) dated 25-01-2018, the contribution received by the association from its members are liable to tax only in excess of the amount of Rs. 7500 per month per member. 10. Taking the first issue regarding the taxability of the activities of the assoc....
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.... or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services." 12. Therefore, for an activity' to qualify as "supply" in terms of Section 7 of the CGST Act, the following ingredients must be satisfied: (i) There must be a supply of either 'goods' or 'services' or both; (ii) The activity should be undertaken for a consideration (iii) The activity should be in course or furtherance of business 13. Section 2(102) of the CGST Act defines "services" to mean anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. The word 'anything' used in the said definition does not necessarily imply that everything other than goods, money and securities, is a service. The contextual meaning of the term 'anything' is to be taken. The meaning of service is to be taken from the recipient's point of view and accordingl....
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....ny payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of,' the supply of goods or services, whether by the recipient or by any Other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: PROVIDED that a deposit, given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies the deposit as consideration for the said supply; In the instant case, the monthly contribution made by the members to the association is in return for receiving the services of the Association in ensuring the maintenance and upkeep of the residential complex. The money collected by the Appellant from its members is used to procure services and goods from a third party and provide the benefits of such procured goods and servic....
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....nt that a service was rendered by one person to another for a consideration in the taxable territory for the levy of service tax to be attracted. However, under GST, the supply of the service should necessarily be in the course of or furtherance of business and 'business' has been defined to include a club, association, society or any such body which provides facilities or benefits to its members for a subscription. 18. The doctrine of mutuality was examined by the Supreme Court in the context of the Sales Tax law and was applied on all fours to service tax. The Supreme Court after going through the various legal provisions of the Finance Act from the introduction of service tax in 1994 till the shift in the system of taxation of services in July 2012, held that, there was no levy of service tax on members clubs in the incorporated form. We are therefore of the view that the ruling laid down by the Supreme Court in the case of Calcutta Club Ltd will not influence the determination of the taxable event of 'supply' under GST in this case. ln view of the above, we hold that there is a supply of service by the Appellant to its members and the same is taxable under GST. 19. We now com....
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....ular No.109/28/2019-GST dated 22.07.2019 issued by the CBIC only clarifies this position. The Appellant has argued that this Circular will apply only prospectively since it is oppressive in nature. This argument does not hold water since the said Circular does not introduce any new levy by its clarifications. The position regarding the exemption from GST was always applicable only when the individual member's contribution per month was within Rs. 7500/-. The Circular dated 22.07.2019 only clarified this position and did not bring in any new levy. Hence the question of applying the Circular prospectively does not arise. 21. The Appellant has also contended that the ruling pronounced by the Authority after the mandated period of 90 days is unsustainable in law. No doubt the ruling given by the Authority has been passed after the time period stipulated under the statute. However, that does not render the ruling null and void or unsustainable. An order which is passed without jurisdiction can be held to be null and void and unsustainable. However, an order suffering from illegality or irregularity of procedure cannot be termed in executable. The remedy of a person aggrieved by such an....