TMI Blog2020 (4) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... cion in its activity. The reason behind the suspicion is that the water received by the society (RWA) is used for multiple purpose i.e. for gardens, washing cleaning, swimming pool and for the use in the apartments etc. and is stored in the common underground water tank which is maintained by the society (RWA) - it is observed that the applicant seems to have bi-furcated the services provided to society (RWA) in order to escape the condition of ₹ 7500 per month per member or it might be crossing the GST registration threshold limit of ₹ 20 lakh. The supply of water in Contract-Il and supply of maintenance services in Contract-I are to the same society (RWA) and relevant to each other, hence there appears no case of direct supply of water by the applicant to the individual residents of the society(RWA). Contract-I and Contract-II appears to be directly linked with each other as there is no case of direct supply of water by the applicant to the individual residents of the society therefore the applicant is required to pay GST as applicable on Contract-I. - RAJ/AAR/2019-20/32 - - - Dated:- 7-2-2020 - J.P.MEENA AND HEMANT JAIN MEMBER Present for the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant to check with the individual members / them on the need for water supply arrangement. In pursuant thereto, the Applicant will enter into a contract [hereinafter referred to as Contract II ] with the individual members (hereinafter known as the Customer ) for supply of water for personal use. The Applicant will typically procure such water from tanker water suppliers (hereinafter known as vendors ) and supply such water to the individual Customers. Considering the fact that there will be no sub-meters it is likely that the Applicant may collect water charges based on the sq. feet area occupied by such Customers/ other suitable basis and will accordingly issue an invoice to the Customers. Contract Il will be optional and hence the Applicant will enter into such contract only with those Customers who desire to procure water from the Applicant. For instance, there may be a society having five wings, in which case, Customers of four wings may choose to procure water from the Applicant and the Customers of the fifth wing may opt for purchasing water from some other source. In light of the given facts, it important to examine the definition of Goods under the Central Goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such to the Customer. Water is movable in nature and therefore qualifies as goods as defined under Section 2(52) of the CGST Act. Further, the Applicant will procure the water from the vendors and will supply the water as such to the Customer without carrying out any further processes in the water. In other words, the activity of the Applicant is simply in the nature of trading of water where on one hand it shall purchase the water from vendors and then supply the same to the Customer. In order to determine the taxability of such supply, reference is drawn to the Notification 12/2017. The Notification provides list of goods which are exempt from GST. Entry no. 99 of the Notification provides that supply of water other than the specified category is exempt from levy of GST. The water supplied by the Applicant is tanker water and is not covered in any of the above mentioned exclusions form the exemption such as aerated, mineral water, purified water etc. It is pertinent to note that the exemption from GST is a blanket exemption and does not provide for fulfillment of any condition to be eligible for the exemption. Thus, the Notification should be applicable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society. (c) The applicant has also submitted that he is going to enter into Contract-II with residents of a society to supply water. The applicant has submitted a draft copy of Contract-Il in this regard. The applicant has submitted that in course of the aforesaid Contract he will purchase water tanker from vendors and subsequently supply the same to the individual resident of the society (RWA) in same form without any processing on the water purchased. (d) The applicant is claiming that since supply of Water as a goods is exempted from GST in accordance with Notification No. 02/2017 dated 28.06.2017, hence this supply is exempted from GST. (e) The applicant has also submitted that though he is not admitting that there is supply of services in Contract-Il but if it is assumed that there is supply of goods (water) and services involved in Agreement-II, then the supply will be a composite supply of water wherein principal supply will be of water. Since principal supply is exempted from GST, the whole supply of Contract-II is exempted from GST. (f) First, we need to examine whether water is a goods or not. Section 2(52) of GST Act, 2017 defines goods as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (i) Further, a Circular No. 109/28/2019-GST dated 22.07.2019 issued by CBIC clarified on applicability of GST on services provided by RWA, the relevant portion is as under-: S.No. Issue Clarification 1. Are the maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society exempt from GST and if yes, is there an upper limit on the amount of such charges for the exemption to be available? Supply of service by RWA (unincorporated body or a non- profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a separate agreement raises a suspicion in its activity. The reason behind the suspicion is that the water received by the society (RWA) is used for multiple purpose i.e. for gardens, washing cleaning, swimming pool and for the use in the apartments etc. and is stored in the common underground water tank which is maintained by the society (RWA). (k) In view of the above facts, it is observed that the applicant seems to have bi-furcated the services provided to society (RWA) in order to escape the condition of ₹ 7500 per month per member or it might be crossing the GST registration threshold limit of ₹ 20 lakh. (l) We further observe that, in general each society consists of many residential towers, varying floors from three to fifteen plus and further each tower consists of many residential apartments which have a common underground and overhead water storage tank. Even though the applicant might have a separate agreement for supply of water and for receiving charges on the basis of per square feet with the residents of the apartment in a particular tower but it is not possible to supply water to each apartment separately as mentioned in the Contract-Il, beca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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