TaxTMI 
TaxTMI 
2025 (5) TMI 1884
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.... 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 NARRATED BY THE APPLICANT: * The Applicant is a residents welfare....
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....icant 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 that the corpus fund/sinking fund is mandatory under the bye-laws of the Cooperative societies/Resident Welfare Association and it is in the nature of deposit towards unforeseen events or planned events. Hence, collectio....
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....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 was subsequently increased to Rs. 7,500/- vide amendment Notification No. 02/2018-CT (Rate) dated 25-01-2018. * The threshold exemption is available to the applicant if the aggregate turnover in a year is upto 20 Lakhs, even if charges per month per member are more than Rs. 7,500/ -. This was clarified by the Board in circular No. 10....
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....ully 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 goods or services from a third person for the common use of its members in a housing society or a residential complex" and charged at NIL rate of tax. The amount specified was increased to Rupees Seven Thousand Five Hundred vide amendment Notification No. 2/2018-CT (Rate) dated 25-01-2018. 8.4 Various issues related to monthly subscription and contribution charges by a Resident Welfare Assoc....
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.... 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 as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; 8.11 As per the above definition, any collection in any form, from the members is a consideration and the activity done by the applicant is in the nature of 'supply of service'. 9. The next question is whether the activity of the society can be said to be in the course of furtherance of business. As per the definition of 'bus....
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....ed 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 as a security for providing supply of goods or services. Further, any amount which is returned back to the person who have made payment is termed as 'security deposit'. 12. As the amount collected now is being used to render service to its members in future, it shall be rightly termed as 'Advance' towards the provision of service to be rendered in future. Therefore, the consideration received by the applicant from its members for the 'supply of service', agreed to be made' is liable to t....