2021 (8) TMI 266 - AAR - GST

Exemption from GST - Repair and maintenance fund - sinking fund - applicability of exemption Limit of Rs. 7500/- on the components of maintenance bill by the housing co-operative Society to members of society - HELD THAT - A plain reading of the Circular No. 109/28/2019-GST dated 22/07/2019 (F No 332/04/2017-TRU Govt Of India Ministry of Finance Department of Revenue (Tax research Unit) makes it clear that it is the intention of the Government to tax Housing Societies under GST Laws subject to the condition that the reimbursement of charges or share of contribution of the members exceed an amount of Rs. 7500/- per month per member for Supply of service rendered by Resident Welfare Association (unincorporated body or a non- profit entity registered under any law) to its own members. In addition it is also clarified that if the Gross turnover exceeds the 20 lakhs but maintenance charges collected are up to or less than Rs. 7500/-per member per month then no is GST applicable - the Government has clarified the eventualities of transactions and has removed the doubts of the taxpayers regarding the applicability of GST. It is a fact that the applicant has collected charges separately on above said heads in maintenance bills and invoices which were issued to its members. Considering the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 and clarification circular issued by TRU it is held that if the applicant has collected the charges from its members on the above said supplies up to Rs. 7500/-per member per month basis then the said supplies would not attract the GST and if the charges collected exceed the Rs. 7, 500/- per month in that case the GST would be applicable on the total amount recovered (by whatever name called) from its members on their supply of services. Thus GST is applicable on Repair and Maintenance Fund and Sinking Fund - if the gross amounts collected by the applicant in their bills/invoices exceed Rs. 7500/- then exemption limit of 7500/-is not applicable on two components of maintenance bills.

Summary

Issues Involved:
1. Applicability of GST on Repair and Maintenance Fund and Sinking Fund.
2. Applicability of the exemption limit of Rs. 7500/- per member on the components of the maintenance bill by a housing co-operative society.

Issue-wise Detailed Analysis:

1. Applicability of GST on Repair and Maintenance Fund and Sinking Fund:

The applicant, a housing co-operative society, sought clarity on whether GST is applicable on the Repair and Maintenance Fund and Sinking Fund. The society is registered under GST as its aggregate turnover exceeds Rs. 20 lakhs. The applicant argued that registration under GST does not necessitate charging GST on monthly maintenance bills if the total monthly bill per member is less than Rs. 7500/-. They cited Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which exempts societies from charging GST if the monthly contribution per member does not exceed Rs. 7500/-.

The concerned officer referred to Circular No. 109/28/2019-GST dated 22/07/2019, which clarifies that services provided by Resident Welfare Associations (RWAs) to their members are exempt from GST if the monthly contribution does not exceed Rs. 7500/- per member. The officer confirmed that if the monthly contribution exceeds Rs. 7500/-, GST is applicable on the entire amount.

The Authority for Advance Ruling (AAR) observed that the applicant, being an unincorporated body and a non-profit entity, is engaged in the supply of services to its members and collects consideration for these services. As per the GST Act, "Repair and Maintenance Fund" and "Sinking Fund" are considered services. Therefore, such services provided by the applicant to its members are liable to tax subject to crossing the threshold turnover limit and as per the provisions of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

2. Applicability of the Exemption Limit of Rs. 7500/- per Member:

The applicant contended that since the monthly maintenance charges per member are within Rs. 7500/-, they are not required to collect GST. The officer clarified that if the aggregate turnover of the RWA exceeds Rs. 20 lakhs, GST is payable on the entire amount if the monthly maintenance charges per member exceed Rs. 7500/-. Conversely, if the aggregate turnover is less than Rs. 20 lakhs, the RWA is not required to register or pay GST even if the monthly maintenance charges exceed Rs. 7500/-.

The AAR examined sample bills provided by the applicant, which included separate charges for sinking fund, repair and maintenance fund, and other maintenance charges. It was observed that if the total value of charges exceeds Rs. 7500/- per member per month, GST is applicable on the entire amount. For example, if the maintenance charges are Rs. 9000/- per month per member, GST @18% is payable on the entire Rs. 9000/-, not just the amount exceeding Rs. 7500/-.

Order:

1. Applicability of GST on Repair and Maintenance Fund and Sinking Fund:
- GST is applicable on the Repair and Maintenance Fund and Sinking Fund.

2. Exemption Limit of Rs. 7500/- per Member:
- If the gross amounts collected by the applicant exceed Rs. 7500/- per member per month, the exemption limit is not applicable. GST is applicable on the entire amount collected.

The AAR concluded that the exemption limit of Rs. 7500/- per member per month is applicable only if the total monthly maintenance charges do not exceed Rs. 7500/-. If the charges exceed this limit, GST is applicable on the entire amount.