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2020 (2) TMI 435 - AAAR - GSTSupply or not - Levy of CGST and SGST - amount of contribution received from its members - association of apartment owners - exemption upto ₹ 7500 from each member / flat - benefit of N/N. 12/2017 CT(R) dt 28.06.2017 (SI.No. 77) read with N/N. 02/2018 dt 25.01.2018 - Input tax credit - levy of CGST/SGST on amounts which it collects from its members for setting up a corpus fund - challenge to AAR decision. Whether the activities of the association of apartment owners are liable to tax under GST as a supply? - HELD THAT:- In the instant case, the monthly contribution made by the members to the association is in return for receiving the services of the Association in ensuring the maintenance and upkeep of the residential complex. The money collected by the Appellant from its members is used to procure services and goods from a third party and provide the benefits of such procured goods and services to the members of the association. In terms of Section 2(d) of the Indian Contract Act, 1872, consideration needs to necessarily flow from one person to another. In the Finance Act, 1994, the taxable event in terms of Section 66B was on services ‘provided or agreed to be provided by one person to another’. Under GST, the taxable event is the “supply” of goods or services or both. As already mentioned, ‘supply’ though not defined has been explained in Section 7 of the CGST Act, 2017 to cover the activities stated therein made in the course or furtherance of business. Under GST law, the term ‘business’ has been specifically defined in Section 2(17) of the CGST Act to include provision by a club, association, society or any such body (for a subscription or any other consideration) of facilities or benefits to its members. Thus, there is a marked difference in the concept of the levy between the Finance Act and the CGST Act. Thus, there is a supply of service by the Appellant to its members and the same is taxable under GST. Whether in terms of entry No.77 of the N/N. 12/2017- Central Tax (Rate) Dated 28-06-2017 as amended by the N/N. 02/2018-CentraI Tax (Rate) dated 25-01-2018, the contribution received by the association from its members are liable to tax only in excess of the amount of ₹ 7500 per month per member? - HELD THAT:- Exemption notifications are subject to strict interpretation. The Advance Ruling Authority had correctly interpreted this exemption Notification. The Circular No.109/28/2019-GST dated 22.07.2019 issued by the CBIC only clarifies this position. The Appellant has argued that this Circular will apply only prospectively since it is oppressive in nature. This argument does not hold water since the said Circular does not introduce any new levy by its clarifications. The position regarding the exemption from GST was always applicable only when the individual member’s contribution per month was within ₹ 7500/-. The Circular dated 22.07.2019 only clarified this position and did not bring in any new levy. Hence the question of applying the Circular prospectively does not arise. Maintainability of Advance Ruling pronounced - time limitation - Appellant has also contended that the ruling pronounced by the Authority after the mandated period of 90 days is unsustainable in law - HELD THAT:- In this case, the Authority was well within its jurisdiction to pass a ruling on the subject matter. Not adhering to the time limit in passing an order can be termed as an irregularity in procedure which can be set right in appeal proceedings - the ruling given by the Authority is correct in law and we do not find reason to interfere with the same. Decision of AAR upheld.
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