TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 134
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.... 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. 6. Whether input tax credit can be claimed on the expenses incurred for heavy repairs and maintenance of the society....
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....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. 2.7 Applicant states that under service tax there was a deeming clause i.e. "An unincorporated association or a body of person, as the case may be, and a member thereof shall....
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....d 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 on supply of services to the Co-operative society-reg dated 5th September, 2017 issued by CBIC. IV Amount collected towards sinking building repair fund etc., shall not liable to tax as tile.) are in nature of deposit. 2.16 ....
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....e 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 said repairing expenditure u/s 16 of CGST Act. Additional Submissions dated 20.10.2021:- The applicant reiterated its submissions made earlier and have submitted that: 2.23 Recently, Hon'ble Madras High Court in case of M/s. Greenwood Owners....
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.....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 taxable event which attracts the levy of GST is the 'supply' of goods or services, in terms of Section 9 of the CGST Act. Under the GST law, the scope of what constitutes 'supply' is stated in Section 7 of the CGST Act. Vide clause 99, an amendment was proposed in the CGST Act, 2017, whereby, in se....
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.....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 shall not be considered as payment made for such supply unless the supplier applies the deposit as consideration for the said supply; 5.3.10 In the instant case, the monthly contribution made by the members to the housing society/Association is in return for receiving the services of the Association in ensuring the maintenance and upkeep of the residential complex. The mon....
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.... 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 benefits to its members for a subscription. 5.3.14 The doctrine of mutuality was examined by the Supreme Court in the context of the Sales Tax law. However, the amended definition of Section 7 has put an end to the issue of the doctrine of mutuality in the cases of registered societies like the applicant. According to the amended definition the applicant and its members are to be treat....
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....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 be defined and connotes an upper limit. It is interchangeable with the term 'till and means that any amount till the ceiling of 7,500/ would exempt for the purpose of GST. 5.4.5 We find that the department has challenged the said decision of the Hon'ble Madras High Court before the Hon'ble Division Bench of Madras High court and Hon'ble Division Bench has issued stay order to the said decision. And, t....
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....inking/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 order to collect deposit by co-operative society, the society has to follow certain procedure of law. Anyone cannot simply collect amounts as deposit. The applicant has not produced any proof as to what procedure was followed while collecting such deposit, whether in balance sheet said amounts are shown as deposit collected individual name wise, what is the amount of interest paid towards the deposit etc. Hence, amount collected towards sinking/repair fun....
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....xempt 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 from Sewage treatment plant installed in the Society premises and supplied to all the flats for use in toilet flushing. 5.7.2 Notification 2/2017-CTR dated 28th June, 2017 pertains to goods supplied and is not applicable to services supplied. The applicant in the subject case is not selling goods per se. Rather it is supplying potable water through storage and pumping system. Whereas the applicant is supplying Flush Water only after treatment carried out in its treatment plant. In both the cases wat....
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....nd 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 limitation in such a situation is, extent of capitalization. The activity of repair and maintenance which encompasses supply of goods for a construction activity is of immovable nature. The provisions of ITC for the said supply of goods is covered under Section 17 (5) (d) read with explanation mentioned therein. Therefore, ITC on GST paid on such goods as mentioned above will not be available to the extent of capitalisation on account of construction service in respect of the concerned immovable property as mentioned in Explanation of S....