TaxTMI 
TaxTMI 
2021 (12) TMI 134
X X X X Extracts X X X X
X X X X Extracts X X X X
....e only on differential value in excess of Rs. 7,500/-? 3. Whether the applicant is liable to pay GST on amount collected from its members towards the following accounts as per the Bye laws: a. Sinking Fund b. Building Repair Fund c. Election and Education Fund 4. Whether the supplies otherwise exempted from tax or charged at Nil rate shall be included in value in computing threshold amount of Rs. 7,500/- per month per member under entry no. 77 of Notification no.12/2017-CTR dated 28th June, 2017, for determining the tax liability? 5 Whether contribution collected to defray expenses for supply of following types of water are covered under entry 99 of Notification 2/2017-CTR dated 28th June, 2017 i.e. under HSN Code 2201 and attracts NIL rate of tax? a. For Potable water received from MCGM u/s 169 of Mumbai Municipal Corporation Act, 1888, which is supplied/distributed to the fiats of the Members through an elaborate storage and pumping system. b. Flush Water (Non Potable water) generated from Sewage treatment plant installed in the Society premises and supplied to all the flats for use in toilet flushing. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iety's objectives. 2.5 Applicant, in support of the applicability of the principle of mutuality in its case, are relying on the following decisions:- i. Hon'ble Jharkhand High court in case of Rancid Club Ltd. v. Chief Commissioner; ii. Hon'ble Mumbai CESTAT in case of Cricket Club of India Ltd. v. Commr of Service Tax; iii. Hon'ble Gujarat High Court in the case of Sports Club of Gujarat Ltd v. UOI; iv. Hon'ble Supreme court in case of STATE OF WEST BENGAL & ORS Vs. M/S CALCUTTA CLUB LTD / RANCH' CLUB LTD; v. Hon'ble Mumbai CESTAT in case of M/s Tahnee Heights CHS Ltd Vs. Commissioner of CGST, Mumbai South 2.6 Since the concept of mutuality was upheld by Larger Bench of Hon'ble Supreme Court during the service tax regime, the same principle will also be applicable in the GST regime, as there is no change in the legal position. Further, there is nothing contrary to the above decision of Hon'ble Apex Court in the case of M/s Calcutta Club Ltd and as per Article 141 of the Constitution of India, the law declared by the Supreme Court shall be binding on all Courts within the territory of India. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exemption entry draws literal interpretation, restricted meaning given by a circular to the same is non-est in law. The exemption entry clearly provides that "upto an amount of Rs. 7,500/- per month per member" there would be no leviability of GST on the same. Drawing legislative intent from the erstwhile service tax law it is beyond doubt that in case of monthly contribution from member exceeds Rs. 7,500/ then it is only differential amount in excess of Rs. 7,500/- is leviable to GST. III. Supplies of goods / services not leviable to GST or exempted or nil/ 0% rated shall not be counted while determining the exemption of Rs. 7,500/- per month per member 2.15 The applicant submits that procurement of goods /services which are otherwise not leviable to GST (including NIL / 0% rate of tax), shall not form part of value for this exemption limit of Rs. 7,500/-. In other words, the applicant collects share from the members towards supplies like water charges paid to MCGM, electricity charges paid to MSEB and property tax which should not be included in computing value for the exemption limit of Rs. 7,500/- per month per member. Reliance is also placed on FAQ's on levy of GST o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....P Plant. In view of entry 99 of above notification 2/2017-CTR supply of water (including supply of water treated in STP) by the applicant to society shall be charged at Nil rate of GST i.e. is exempted from levy of GST. VI. ITC is eligible on heavy repairs and maintenance expenditure incurred, which are not capitalized in the books of accounts 2.21 The applicant society proposes to incur expenditure on repairs and maintenance of the civil structure of building and its premises to improve the dilapidated condition of the civil structure. The said expenditure shall be made from the earmarked Repairs/ Sinking Fund collected from the members on regular basis and shall not lead to creation of any new asset for the society or its members and therefore they do not intend to capitalize said expenditure incurred on repairs and maintenance in their books of accounts. 2.22 Section 17(5) of the CGST Act, states that input tax credit in respect of works contract services for construction of immovable property shall be restricted only to the extent the same is capitalized in the books of accounts and not otherwise. Therefore, applicant is eligible to avail the ITC of GST paid on the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etc. To manage and maintain its property, the applicant procures goods and services from third party vendors. We now deal with the questions raised by the applicant as under:- 5.3.1 Question No. 1:- Whether the applicant is liable to pay GST on the contribution received from its members? 5.3.2 The applicant has submitted that the society and its members are not distinct persons and on the principle of mutuality since they are one and same person, the impugned transactions between the applicant society and its members are not liable to tax under the provisions of the GST Laws. 5.3.3 The applicant has relied upon a number of decisions passed by the various authorities and the Hon'ble High Courts and the Hon'ble Supreme Court in service tax matters, to support their contention that the applicant's transactions with its members are not taxable under the provisions of the GST Act. Further, in their submissions the applicant has also made a comment that this authority may distinguish the applicability of the ratios of Hon'ble Supreme court ruling relied upon, failing which it will tantamount to contempt of court. 5.3.4 Under the GST regime, the taxabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mbers; .......................... 5.3.8 Clause (e) of the Business definition is relevant and it is clear from the said clause that the activity of providing facilities or benefits by an association to its members for a subscription is a business under GST Act. Hence the transactions between the association and its members is a service. 5.3.9 Further, Section 2(31) of the CGST Act states that 'Consideration' in relation to the supply of goods or services includes,- (a) any 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Finance Act, 1994 under which, the taxable event in terms of Section 66B was on services 'provided or agreed to be provided by one person to another'. Under GST, the taxable event is the "supply" of goods or services or both. As already mentioned above, the activities undertaken by the applicant are covered under the amended definition of 'supply'. Further, under the GST laws, the term 'business' has been specifically defined in Section 2(17) of the CGST Act to include provision by a club, association, society or any such body (for a subscription or any other consideration) of facilities or benefits to its members. Thus, there is a marked difference in the concept of the levy between the Finance Act and the CGST Act. In terms of the Finance Act, it was sufficient 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 provision by a club, association, society or any such body which provides facilities or benef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an Rs. 7,500/-, will not be eligible for the exemption under entry No 77 and the entire contribution amount will be liable to be taxed. Hon'ble Supreme Court of India, Constitution Bench of Five Judges in the case of Commissioner of Customs (Import) Mumbai Vs. M/s Dilip Kumar and Company and Ors (Civil Appeal No. 3327 of 2007) has held that the benefit of ambiguity in exemption notification cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue/state. Exemption notifications are subject to strict interpretation. The Circular No. 109/28/2019-GST dated 22.07.2019 issued by the CBIC only clarifies this position. 5.4.4 The applicant has also cited the recent ruling of the Hon'ble Madras High Court in case of M/s Greenwood Owners Association (2021 (7) TMI 591) wherein it is held that above clarification in Circular 10928/2019-GST is contrary to the express language of the Entry 77 and shall stand quashed. It stated that the plain words employed in Entry 77 being, 'upto' an amount of 7,500/-can thus only be interpreted to state that any contribution in excess of the same would be liable to tax - the term 'upto hardly needs to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of services in the instant case and the collected fund gets used accordingly for provisions of such services. 5.5.4 Applicant has submitted that, the proviso to Section 2(31) of the CGST Act states 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. 5.5.5 We find that, the amount towards sinking/repair fund is collected as per percentage fixed in its bye-laws and as per the various circulars issued from time to time by the Registrar of Co-operatives and as per the provisions of the Co-operative Societies Act. The society cannot collect any amount as sinking fund as it deems fit, but the fixed amount is collected as per or by following the provisions contained in its byelaws. So it (such collection) has force of law. The expenditure of this amount is subsequent event. So collection per se, cannot be termed as deposit. If it is deposit, then it can be refunded. The applicant has not produced any evidence to show that there are instances when such collected amounts are returned back to members after its collection. In orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t has submitted that certain statutory dues such as property tax, electricity charges etc, form part of the monthly maintenance bill raised by the society on its members. 5.6.4 As per clause (b) in Sr No 77 of said Notification, exemption is available to housing societies for provisions of carrying out any activity which is exempt from the levy of Goods and service Tax assuming that a housing society is a non-profit registered entity; and property tax and electricity, etc. are exempt from the levy of GST. Thus, charges, collected by the society on account of property tax, electricity charges and other statutory levies would be excluded while calculating the limit of Rs. 7,500/, 5.7.1 Question No. 5 :- Whether contribution collected to defray expenses for supply of following types of water are covered under entry 99 of Notification 2/2017-CTR dated 28th June, 2017 i.e. under HSN Code 2201 and attracts NIL rate of tax? a. For Potable water received from MCGM u/s 169 of Mumbai Municipal Corporation Act 1888, which is supplied/distributed to the flats of the Members through an elaborate storage and pumping system. b. Flush Water (Non Potable water) generated fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation: For the purposes of clauses (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property,'" 5.8.4 The applicant has submitted that it proposes to incur expenditure on repairs and maintenance of the civil structure of building and its premises and the said expenditure shall be made from the earmarked Repairs/ Sinking Fund collected from the members on regular basis and shall not lead to creation of any new asset for the society or its members and therefore the applicant do not intend to capitalize the said expenditure incurred on repairs and maintenance in their books of accounts. 5.8.5 In view of the provisions of Section 17 (5) mentioned above, input tax credit generally is not available for construction, reconstruction, renovation, addition, alteration or repair of an immovable property even when such goods or services or both are used in course or furtherance of business. However, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion no.12/2017-CTR dated 28th June, 2017 for the value upto Rs. 7, 500/- per month per member and in case the said monthly contribution exceeds Rs. 7,500/- per month, then the GST is leviable only on differential value in excess of Rs. 7,500/-? Answer: - In view of the discussions made above, in case the said monthly contribution exceeds Rs. 7,500/- per month, then the GST is leviable on the entire value of the monthly contribution collected. Question 3:- Whether the applicant is liable to pay GST on amount collected from its members towards the following accounts as per the Bye laws: a. Sinking Fund b. Building Repair Fund c. Election and Education Fund Answer:- GST is applicable as discussed above. Question 4 :- Whether the supplies otherwise exempted from tax or charged at Nil rate shall be included in value in computing threshold amount of Rs. 7,500/- per month per member under entry no.77of Notification no.12/2017-CTR dated 28th June, 2017, for determining the tax liability? Answer:- Thus, charges, collected by the society on account of property tax, electricity charges and other statutory levies would only be excluded while calculatin....