TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 340
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....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, size, or value of individual dwelling units. 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 collects periodic contributions from its members towards creating and maintaining a corpus fund or sinking fund. These contributions serve as a financial reserve to meet unforeseen expenses, major repairs, or long-term capital improvements such as building repainting, elevator replacement, structural repairs, or refurbishment of water supply systems. The corp....
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....ation of the liability to pay tax on the goods or services or both. Accordingly, the present application is admissible in terms of Section 97(2)(c) and Section 97(2)(e) 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 collects contributions towards a corpus fund/sinking fund, which serves as a reserve to meet future contingencies, unforeseen expenses, major repairs, and long-term capital improvements such as building repainting, elevator-replacement, structural repairs, refurbishment of water supply systems, and similar infrastructure-related requirements. 7. The key issue raised by the Applicant is whether the corpus fund/sinking fund collected from members for future contingencies constitutes "consideration" under the Goods and Services Tax (GST) Act, 2017 thereby attracting GST. The Applicant also seeks clarity on: 1. Whether such corpus/ sinking fund contributions are to be treated as a separate and independe....
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....es, and does not fall within the category of recurring monthly contributions, the Applicant contends that corpus/sinking fund collections lie outside the scope of taxable supplies and therefore fall outside the GST ambit entirely. d. The Applicant also relies on the following judicial precedents to support its contention that corpus/sinking fund contributions are not taxable under GST: I. Lions club of poona (2022-TIOL-69-AAAR-GST): In this ruling, voluntary contributions to a fund (akin to corpus fund) examined and determined that they were not subject to GST as they did not constitute consideration for any supply. II. Calcutta Club Limited Vs CIT (2019) SC:- In this judgment, the Hon'ble Supreme Court upheld the principle of mutuality, confirming that contributions made by members for collective benefit are not treated as taxable transactions. III. XYZ Apartment Association Vs GST Council: In this ruling, it was held that corpus funds retained solely for future contingencies and not for immediate service consumption are not subject to GST. 9. PERSONAL HEARING PROCEEDINGS HELD ON 20.11.2025:- Ms. Deepa K Shetty, Chartered Accountant and....
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....n, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation.- For the purpose of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being inforce or any judgment, decree or order of 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 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. Section 2 (31) of CGST Act, 2017 - the expression "Consideration" 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 ....
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.... 7(1) of the CGST Act, 2017 expressly provides that, for the purposes of GST, an association or society and its members shall be treated as distinct persons. As a consequence of this statutory deeming provision, the traditional principle of mutuality-under which a club or association and its members were considered one and the same-does not apply under the GST regime. Therefore, the applicant's contention that "the members and the association are the same person" based on the doctrine of mutuality cannot be accepted, as the law specifically overrides this concept and treats transactions between the association and its members as supplies between two separate persons. (v) Having established that the applicant and its members are to be treated as distinct persons under the Explanation to Section 7(1) of the CGST Act, 2017, the next issue is to determine "whether the activity constitutes a supply of goods or a supply of services". Goods and services defined under Section 2 (52) and 2(102) of CGST Act, 2017 respectively, which is reproduces as below: Section 2 (52) of CGST Act, 2017:- Definition of Goods: "Goods" means every kind of movable property other than money and ....
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....ssociation for its members are classifiable under Chapter Heading 9995, falling under the description "Services of Membership Organisations", and more specifically under Service Code 999598, described as "Home Owners Association", as per the Scheme of Classification of Services (Annexure). Accordingly, the amounts collected towards the corpus fund are indisputably in the nature of advances for future supply of service and not deposits. As discussed earlier, the corpus fund collected by the applicant for future contingencies constitutes consideration for a future supply of services and, therefore, attracts GST in terms of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, under SAC 999598 15. The second question is that can corpus funds collected by applicant be treated as separate and independent from monthly maintenance charges for the purpose of GST applicability? The Nature and purpose of Monthly Maintenance Charges and Corpus Fund/Sinking Fund is as detailed below: 1. Monthly Maintenance Charges:-Monthly maintenance charges collected by the RWA are applied toward regular, recurring, and continuous services necessary for day-to-day upkeep and functionin....
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....t the time of collection or at the time of actual utilization of these funds and fifth question is Would the time of supply provisions under GST apply to corpus funds in case they are treated as advances for any potential taxable supply in the future? (1) The third and fifth questions are interlinked because both relate to the timing of GST liability on corpus/sinking fund collections. Therefore, both are discussed together. As already discussed in Para 15(vi) and 16(2) & (3), corpus or sinking fund contributions are collected in advance to meet future contingencies or major, non-recurring capital expenditures, such as: • Major structural repairs • External/internal painting • Replacement or overhauling of lifts • Other long-term infrastructure or capital works Although these expenditures will occur in the future, the collection itself takes place upfront. 2. Applicability of Time of Supply Provisions (Section 13 of the CGST Act) Section 13(2)(a) of the CGST Act, 2017 provides: The time of supply of services shall be the earlier of: (i) the date of issue of invoice (if issued within prescribed time....