TaxTMI 
TaxTMI 
2025 (5) TMI 1884
X X X X Extracts X X X X
X X X X Extracts X X X X
....the applicant by fraud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 1.0 At the outset, we would like to make it clear that the provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act are in pari materia and have the same provisions in like matters and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act, 2017. 2.0 M/s Crimson Dawn Apartment Owners Association (hereinafter "the Applicant") has made a debit in their Electronic Cash Ledger with reference Number DC3306240157093 dated 19-06-2024 evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. The online application form for advance ruling dated 10th Nov, 2023 was physically received on 09-07-2024 as mandated under Rule 107A. 3.0 STATEMENT OF FACTS AS NARRAT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on' given under Section 2 (31) the applicant contended that the amount collected is merely capital contributions and thus not forming part of consideration. • The applicant viewed that these separate contribution to the enhancement of the common area infrastructure of the apartment is not directly tied to the services provided to individual clients and consequently the funds so collected will not be regarded as consideration for supply of service. • The collection of corpus fund typically utilized for specific purposes, is not classified as an application of funds in same sense as regular operational expenses. Instead, it represents an enhancement of common area infrastructure of the apartment. These are earmarked for a specific projects or investments aimed at bolstering the company's long term viability and growth prospects. So it differs from regular expenditure and is viewed as a strategic allocation aimed at fortifying the business asset portfolio rather than day-to day operational cost. • Therefore, the amount collected towards Corpus fund/sinking fund is not in the course of furtherance of business. • It is fact tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and 'business' contained in Section 2 (31), 2 (84) and 2 (17) respectively, the activity of the applicant would fall within the scope of clause (a) of Section 2 (31), clause (f) of Section 2 (84) and clause (e) of Section 2 (17) of the CGST/TNGST Act, 2017, thus satisfying all the above four conditions contained in the definition 'scope of supply'. • Hence, for query-1, it is opined that the collection of Corpus/sinking fund/capital amount by the applicant from residents for the purpose of painting and carrying out some building maintenance work in the common area of the apartment is a supply and would be leviable to GST. Further, the activity of the association are covered under 'Services of membership organisation' which are taxable supplies and specific entry is made against service accounting code (SAC) 9995 and chargeable to 18% vide Notification No. 11/2017-CT(Rate) dated 28-06-2017. • However, full exemption is provided under Notification No. 12/2017-CT(Rate) dated 28-06-2017 at SI. No. 77, if the subscription or contribution collected from the members, if the amount does not exceed Rs. 5,000/- per month per member, which wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e collection, maintenance of corpus fund, its nature & purpose, expenditure to be incurred. In addition, members requested to furnish copies of receipts and balance sheets for three years to see how the corpus fund is accounted. The applicant vide e-mail dated 11-04-2025 has submitted the documents called for during the personal hearing. 8. DISCUSSION AND FINDINGS: 8.1 We have carefully considered the submissions made by the applicant in the advance ruling application and also the submissions made during the personal hearing. 8.2 The issue involved in the first question is, as whether collection of corpus fund/sinking fund/capital amounts from the residents for the purpose of painting and carrying out some building maintenance work in the common area of the apartment would be subject to the levy of GST. 8.3 SI. No. 77 of Notification No. 12/2017-CT (Rate) dated 28-06-2017 exempts intra-state supply of "Services by an unincorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution-(c) up to an amount of five thousand rupees per month per member for sourcing of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion with regard to facts that they are registered under the provisions of the Tamilnadu Societies Registration Act, 1975 and hence fall within the definition of 'person'. 8.10 The definition of "consideration" is required to be analysed to establish that the activity rendered by the applicant is a service. Section 2 (31) of the Act defines 'consideration' as, (31) "consideration" in relation to the supply of goods or services or both 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 or both, 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, in respect of, in response to, or for the inducement of, the supply of goods or services or both, 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....detail about the various activities proposed to be undertaken such as painting, building maintenance etc., and listed the activities for an amount of Rs. 2,07,96,931/ -. Then the association unanimously passed resolution that "an amount of Rs. 2,00,000/- per apartment be collected from the residents as sinking fund contribution for carrying out the painting and other identified building related works/activities and the said amount be collected in 4 installments on or before 31st May, 2024". Thus, the amount collected by the applicant from its members towards sinking fund is only meant for meeting expenses for future supply of services and therefore such contribution cannot qualify as 'deposit'. 11. Proviso to the definition of 'consideration' states that deposit given for supply of goods or services shall not be considered as payment for the supply of goods or services unless the supplier appropriates such deposit as consideration for the said supply. The term 'deposit' in normal parlance, is 'an amount being held in any bank account, especially to earn and accumulate interest'. In most of the case, the amount collected as security deposit is kept....