9911796707
TMI Blog2019 (11) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices Act, 2017. The applicant have sought advance ruling in respect of the following questions: 1) Whether the activity of procuring Goods and Services from third parties for upkeep and maintenance of Apartments and collecting the monies from its members to pay third party vendors is an activity liable to GST? 2) If liable to GST, whether the exemption entry no 77 of notification 12/2017 Central Tax (Rate) dated 28.06.2017 apply for maintenance charges collected from members? 3) If exemption is available, whether it is available on per member basis or per flat basis, as some members could have more than one flat? 4) Whether the exemption as per entry no 77 of Notification 12/2017 Central Tax (Rate) is a standard exemption that can be claimed irrespective of amount collected towards maintenance? i.e. if maintenance charges from a member for a month is Rs. 10,000/-, whether Rs. 10,000/- liable to GST or Rs. 2,500/- (Rs. 10,000 - 7,500) liable to GST? 5) Whether the electricity charges paid to BESCOM (Electricity supply authority) for the power consumed towards common facilities and separately recovered from members, liable to GST? 6) Whether the Corpus/Sinking Fund col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis to apportion the common area electricity cost. By following this, the applicant recovers the actual amount incurred towards electricity from each of the units by raising a debit note indicating their share of charges towards electricity. 3.7 The applicant states with regard to the corpus fund / sinking fund that in order to meet any planned or unplanned capital outlay in future, they would also recover certain amounts as "Corpus Fund" or "Sinking Fund" for a specified purpose and the account of such funds would be separately maintained and would be used for the purpose for which such fund is collected and not towards the regular maintenance activity. APPLICANTS VIEW ON QUESTIONS SOUGHT FOR ADVANCE RULING: 4. The applicant, with regard to the activity of procurement of goods and services from third parties for upkeep and maintenance of apartments and collection of monies from its members to pay third party vendors & the GST liability thereon, submits that the association is no different person to the members and instead of each of the member taking care of the maintenance of their common area individually, for all practical purposes, the association is formed. The amounts col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the upkeep and maintenance of the premises and not to make profit out of its members' contribution, though there could be a temporary surplus of funds sometimes. (b) Exemption upto Rs. 7,500-00 per month per member Wordings used in the entry is "upto Rs. 7,500/- per month". The applicant is of the view that the exemption of an amount upto Rs. 7,500/- would be allowed i.e. if the maintenance charge is Rs. 10,000/-, an amount upto Rs. 7,500/- is exempted and only the balance of Rs. 2,500/- is taxable. They have taken the example of Income Tax Slabs in support of their contention. (c) The applicant also place reliance on the extract of e-flier on Co-operative Housing Societies released by the CBIC, which clarifies that on the amount in excess of the exemption limit would be taxable. 7. The applicant contends with regard to applicability of exemption to members on per member basis or per flat basis, if available and in cases where members have more than one flat, that that they are of the view that each unit contributing towards maintenance charges is to be considered as a separate member. Thus in case a person owns more than one unit, exemption would be apply for each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges collected exceeds the Rs. 7,500/-, the balance in excess of Rs. 7,500/- only is liable to GST. 11. FINDINGS & DISCUSSION: 11.1 We have considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri Chandrashekhar B D, Chartered Accountant appeared during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 11.2 The applicant seeks advance ruling in respect of the questions mentioned at para 2 supra. We proceed to answer the questions one at a time sequentially. The applicant is an Apartment Owners' Association engaged in providing maintenance or repair of the common area of the apartments and surrounding area, viz. corridors, pathways, gardens, clubhouse, swimming pool, lifts, etc., The applicant als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.01.2018 is available for an amount, up to Rs. 7,500/- per month per member, collected for sourcing of goods or services from a third person for common use of the members. 11.6 The third question relates to the applicability of the aforesaid exemption, whether it is per member basis or per flat basis. In this regard we draw attention to the Circular No. 109/28/2019-GST dated 22.07.2019 wherein the instant issue has been clarified at para 1, issue number 4, and the same is as under: As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the Residential Welfare Association (RWA) for each residential apartment owned by him separately. The ceiling of Rs. 7,500/- per month per member shall be applied separately for each residential apartment owned by him. In view of the above, in the applicant's terms, the exemption is applicable to eligible members on per flat basis. 11.7 The fourth question is related to the applicability of exemption under entry number 77 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 2/2018 - Central Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and for this the electricity consumed by them becomes an input. Though the electricity bill is distributed to all its members, it is not the consideration for the supply of electrical energy to the members but the value is a part of the consideration for the supply of services to its members and hence is liable to tax at appropriate rates. Hence this value of electricity charges separately shown in the invoices is to be added to the considerations shown towards the same service of upkeep and maintenance charged to individual members and then the consideration for the supply of such service is to be arrived and the taxable value shall be determined. 11.9. The sixth question is related to applicability of tax on the Corpus / Sinking Fund. The applicant collecting the amounts towards corpus / sinking fund for future supply of services meant for its members. It is a fact that the corpus fund or sinking fund is mandatory under the Bye-laws of the Co-operative Societies/ Resident Welfare Associations and is in the nature of a deposit towards unforeseen events or planned events. Clause (31) of section 2 of the CGST Act, 2017 defines the term "consideration" which is as under: "(31) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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