AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 394
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....sonnel, including serving soldiers, veterans, war widows, and their families. The Applicant is responsible for the security, housekeeping, and overall maintenance of the complex, including waste management, essential services, and the supply of potable water. All expenses incurred by M/s SVOA-such as water charges and electricity charges-are proportionately allocated to the members and recovered from them. Monthly subscription charges are collected from members on a quarterly basis to fund these services. A corpus fund is also maintained to meet future contingencies and major repair requirements. The Sandeep Vihar Community Centre (SVCC), located within the apartment complex, provides paid recreational, shopping, and guest room facilities. For the upkeep of SVCC, a separate charge of Rs.450 per flat is levied. 3. In view of the above, the applicant has sought advance ruling in respect of the following questions: 1. If a housing society recovers the actual costs of water supplied to the society and its members through separate monthly debit notes, does this recovery attract GST, despite water being generally exempted from the tax? 2. Whether the applicant liable....
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....pted from the tax? II. Whether recovery of Electricity bills from its members for common areas on actual cost basis is liable for GST? III. Whether the collection of corpus fund from members for the purpose of meeting future capital expenditure amounts to a "supply" under Section 7 of the CGST Act, 2017? IV. If collection of corpus fund constitutes a supply, what shall be the applicable "time of supply" for the purpose of payment of GST-whether GST is payable at the time of collection of such corpus amount from members or at the time of its actual utilization for capital expenditure? V. 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 monthly levied for the upkeep of the Sandeep Vihar Community Centre? 7. Applicant's Interpretation of Law:- 7.1 In respect of Question No. 1 of Para 3 above, the Applicant submits that the supply of water is exempt from GST under Entry No. 99 of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017. The relevant entry exempts "water (other than....
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....a, AIR 1996 SC 869). Applying the above illustration and legal principle to the present case, the Applicant, being a mutually aided co-operative society and based on the submissions made before the AAR, clearly satisfies the conditions of a pure agent with respect to the collection and remittance of electricity charges. A combined reading of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 (which exempts electrical energy under SI. No. 104, Chapter Heading 27160000) and Rule 33 of the CGST Rules, 2017 leads to the clear conclusion that the cost of electrical energy recovered by the Applicant as a pure agent is not taxable in the hands of the Applicant. Moreover, since electrical energy itself is exempt from GST, it cannot be clubbed with other supplies made by the Applicant to form a composite supply, as a composite supply under Section 2(30) of the CGST Act necessarily requires two or more taxable supplies. 7.3. In respect of Question No. 3 of Para 3 supra, the Applicant has referred to the definitions of goods and services as contained in Sections 2(52) and 2(102) of the CGST Act, 2017. From these definitions, it is evident that money is neither "goods" nor "....
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....s collected from members constitute consideration, thereby fulfilling the second condition. Furthermore, as the facilities are provided to members for consideration, such activity falls within the definition of "business" under Section 2(17) of the CGST Act, 2017, meeting the third condition. Therefore, the applicant contends that the amounts collected from members toward club maintenance should be treated as part of the monthly maintenance charges and, accordingly, should be eligible for exemption if the total amount remains within the threshold limit specified under Notification No. 12/2017-State Tax (Rate) dated 30.06.2017. 8. PERSONAL HEARING PROCEEDINGS HELD ON 20.11.2025 Shri Madhusudhan N. Hiremath, the duly authorised representative of the applicant, appeared for the personal hearing conducted on 20.11.2025 before this Authority. He reiterated the facts stated in the application and, in addition, submitted that the charges collected towards the Club/Community Centre are mandatory in nature, irrespective of actual usage of the facilities. He therefore requested that an Advance Ruling be issued on the questions raised in the application. FINDINGS & DISCUSSION: ....
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....common facilities of Sandeep Vihar; and carrying out repairs, improvements, and maintenance of shared infrastructure. From the above objectives, it is evident that the Association is constituted for the purpose of providing various services to its members relating to the maintenance of common areas, infrastructure and capital assets, thereby ensuring liveable conditions for the residents. (ii) Legal Position under the CGST Act, 2017:- (a) Section 7 - Scope of Supply :- Section 7(1) of the CGST Act, 2017 provides: 7(1) For the purposes of this Act, the expression "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation: For the purposes of this clause, it is clarified that, notwithstanding anything contained in any other law or judgment, the person and its member....
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.... the total monthly contribution per member (including water charges) exceeds the exemption limit prescribed under Entry 77 of Notification No. 12/2017-CT (Rate). 14. The Second question is that Whether recovery of Electricity bills from its members for common areas on actual cost basis is liable for GST or Not ? i. In this regard, the applicant submits that Serial No. 104 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017, provides an unconditional exemption from CGST on "Electrical Energy." They further refer to Rule 33 of the CGST Rules, 2017, along with its illustration, which states that expenditures or costs incurred by a supplier as a pure agent of the recipient are to be excluded from the value of the supply as discussed in detail in Para No. 7 (2) supra. ii. After examining the applicant's submissions and the relevant GST provisions discussed in Para (13)(i) to (iii), it is evident that an Association and its members are treated as distinct persons for GST purposes, and that the applicant is undertaking certain activities which constitute a supply of services to its members. iii. The question that now arises is whether the exemption under Serial No....
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.... (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of services; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation.- For the purposes of this rule, the expression "Pure Agent" means a person who: (a) Enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) Neither intends to hold nor holds any title to the goods or services or both so procured or supplies as pure agent of the recipient of supply; (c) Does not use for his own interest such goods or services so procured; and (d) Receive only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. viii. To qualify as a pure agent, all conditions under Rule 33 of CGST Rules, and 2017 must be satisfied by the applicant. The key ....
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....nition of Supply and person are already discussed in Para 13(ii) supra which clearly established that an Association and its members are treated as distinct persons for GST purposes. Further, the term "Consideration: defined in Section 2 (31) of CGST Act, 2017 and same is as under: (ii) "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 as payment made for such supply unless the supplier applies such deposit as consideration for the said....
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....applicant is an Association constituted for the purpose of providing services to its members. The members, in turn, are liable to pay consideration to the applicant for such activities, as specified in the by-laws of the Association. ix. The activities undertaken by a Resident Welfare Association 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. x. In respect of Corpus fund, applicant view is that contributions made towards the corpus fund represent a transaction in money and therefore fall outside the scope of GST. To substantiate this view, the Applicant has drawn an analogy with contributions made by various forms of business entities to meet present or future contingencies, which are not treated as taxable supplies under GST. For instance: • In a proprietorship-capital contribution....
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....rnal painting • Other long-term infrastructure or capital works Although these expenditures will occur in the future, the collection itself takes place upfront. (i). 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), or (ii) the date of receipt of payment. In this case: • The applicant (RWA) collects corpus fund in advance, and • Receipt of payment occurs before any actual supply of service or before any invoice is raised. Therefore, as per Section 13(2) (a), the time of supply is triggered on the date of receipt of the corpus fund amount, if such collection is considered an advance towards a future supply. In view of the above, the answer of the question is GST is payable at the 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 fourth question is that could the monthly charges levied for the upkee....
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....elow: Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended:- Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate Rate (per cent.) Condition 77 Heading 9995 Service 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- (a) as a trade union; (b) for the provision of carrying out any activity which is exempt from the levy of Goods and service Tax; or (c) up to an amount of Seven thousand five hundred 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. Nil Nil 17.5 Further, Para 1, Issue No. 5 of Circular No. 109/28/2019-GST dated 22.07.2019 issued vide F. No. 332/04/2017-TRU, which also deals directly with maintenance Charge collected by RWAs or similar associations is reproduced below: "The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exc....