TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 343
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....ities for the collective benefit of its members, and ensure smooth day-to-day operations of the society. For these purposes, the Applicant collects monthly maintenance charges from its members. Such charges are determined in accordance with the governing bye-laws of the society and are generally proportional to the area of the unit. The amounts so collected are utilized towards recurring expenditures, including payment of salaries to security personnel, housekeeping staff, gardeners, and other service providers, as well as the maintenance and upkeep of common areas such as staircases, lobbies, elevators, corridors, and parking spaces. The funds also cover common utilities like electricity and water consumed in shared facilities and infrastructure. 3. In addition to the monthly maintenance charges, the Applicant also wishes to collects some corpus fund from its member in order to build up a fund that will be used to carry out Capital Expenditure such as painting, replacement of capital goods etc. These contributions serve as a financial reserve to meet unforeseen expenses, major repairs, or long-term capital improvements such as building repainting, structural repairs, or refurbi....
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....which the applicant seeks an advance ruling primarily relate to: 1. Applicability of a notification issued under the provisions of this Act; 2. Determination of time and value of supply of goods or services or both and 3. Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services both, within the meaning of that term Accordingly, the present application is admissible in terms of Section 97(2)(b), 97(2)(c) and Section 97(2)(g) of the CGST Act, 2017. 6. Brief Facts of The Case:- The Applicant collects monthly maintenance charges from its members to meet the day-to-day maintenance expenses of the society and ensure the smooth functioning of common facilities and services. In addition to these regular charges, the Applicant also wishes to collect contributions towards a corpus fund, which serves as a reserve to meet future contingencies, unforeseen expenses, major repairs, and long-term capital improvements such as building repainting, structural repairs, refurbishment of water supply systems, and similar infrastructure-related requirements. 7. The key issue ....
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....d in GST Law and they refer to dictionary definitions of deposit stating it broadly means • Money placed in a bank • Or money set aside for a specific purpose Since, the corpus fund is essentially a contingency fund collected and kept aside for future capital works. Therefore, it should be treated as a deposit, not as a payment for any current supply. Since a deposit is not "consideration" until actually applied, the act of collecting corpus does not constitute consideration at the time of collection. Without consideration, the second condition for "supply" is not satisfied. Hence, no supply takes place at the time of collection of corpus fund. 8.2. In respect of question no. 2 of Para 4 Supra, the interpretation of the applicant is that, if their interpretation of the law in respect of supply is not proper and act of collecting corpus fund is treated as supply then exemption provided vide Entry No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.096.2017 as amended apply in respect of collection of Corpus fund subject to threshold value of RS. 7500/- per month per member as M/s AOARLV is an unincorporated body registered under the Karnata....
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....pari materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the KGST Act, 2017. 11. We have considered the submissions made by the applicant in their application for advance ruling. We have also considered the issues involved on which advance ruling is sought by the applicant, relevant facts, and the arguments made by the applicant and the submissions made by their learned representative during the time of hearing. 12. We have carefully examined the application made by the applicant M/s Apartment Owners Association of Raj Lake View (M/s AOARLV), the submissions provided therein, the arguments advanced during the personal hearing. The main issues for consideration are "Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services both, within the meaning of that term" and "Determination of time and value of supply of goods or services or both" and "A....
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....any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. (b) ..... (c) ...... 7 (1A) Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. (ii) According to Section 7(1)(aa) of CGST Act, 2017, the expression "supply includes" the activities or transactions, by a person, other than individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. The term "person" is defined in Section 2 (84) of the CGST Act, 2017 and same is as under: "Person" includes- (a) An individual; (b) ..... .......... .......... (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) ...... .......... ..... The term "Consideration: defined in Section....
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....ve, it follows that any payment made or to be made by the members of an association to the association itself, in respect of or in response to a supply of goods or services, would ordinarily qualify as consideration under Section 2(31) of the CGST Act, 2017. However proviso under the definition states that 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 In view of the above, the issue before us is to determine whether the payments collected by the applicant under the head 'corpus fund' constitute advances toward future supply of services or are in the nature of deposits. VIII. There are well-recognized distinctions between an advance and a deposit. An advance is generally a payment made upfront toward a future supply and is typically non-refundable, whereas a deposit is ordinarily refundable and held as security, subject to return upon occurrence of specified conditions. IX. It is an admitted and established fact that the applicant is an Association constituted for the purpose of providing services to its members. The ....
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....he time of collection of the corpus fund, and the time-of-supply provisions under Section 13 of the CGST Act apply to corpus fund collections treated as advances. 17. The third question is that "Whether the applicant is entitled to claim the benefit of the exemption of Rs.7,500 per member per month provided under Entry No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 in respect of the corpus fund collected from members, and if so, whether the exemption is to be determined in the month on which corpus collected or pro-rata for the entire 12 months". (i) Entry No. 33 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended read with Scheme of Classification of Services (Annexure) and Entry No. 77 of Notification No. 12/2017-Central Tax (Rate) Dated 28.06.2017 as amended are specifically deal with services provided by membership organisations. which is reproduced below: (ii) Notification No. 11/2017-Central Tax (Rate) Dated 28.06.2017, as amended read with Scheme of Classification of Services Sl.No Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate Rate (Per cent.) Condition 33 He....
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....d regular, recurring, and continuous services necessary for day-to-day upkeep and functioning of the residential society. These include: • Cleaning and housekeeping of common areas (lobbies, corridors, staircases, parks, gardens, swimming pool, play areas, sports areas, open spaces, etc.) • Waste collection and disposal • Salaries of security staff, housekeeping personnel, and office/administrative staff • Payment of common electricity and water charges • Other operational and routine expenses of the society Corpus Fund:- The corpus fund is collected one-time or infrequently, and it is specifically earmarked for capital or major non-recurring expenditures, such as: • Major structural repairs of the building • External/internal painting of the building • Replacement or major overhaul of lifts (vii) Accordingly, it is evident that Corpus fund collections are entirely separate from monthly maintenance charges and both amounts are distinct in character and purpose. Therefore, the corpus fund can be treated as separate and independent from monthly maintenance charges for G....