TMI Blog2021 (1) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration for the said supply. In the instant case, we find that the applicant is a registered entity as an Association of Persons and has a legal existence separate from its members. The applicant is collecting the amounts towards Common Maintenance Fund (Deposit) @ ₹ 250/- per square foot of built-up area for future supply of services viz. maintenance, repair etc. of the common amenities, facilities, services, conveniences, utilities and common infrastructure of the Scheme meant for its members. It is a fact that the Common Maintenance Fund (Deposit) is mandatory under the Bye-laws of the Co-operative Societies/Resident Welfare Associations and is in the nature of a non-returnable deposit towards unforeseen events or planned events. Such deposit is never to be returned to the members, but same along with its interest will be used as and when required in future for maintenance, repair etc. of the common amenities, facilities, services, conveniences, utilities and common infrastructure of the Scheme meant for its members. Thus, the applicant, in addition to maintenance charges, also collected amount as Common Maintenance Fund (Deposit) from their members which is non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Developer M/s. Sahjanand Buildtech LLP has promoted a scheme of commercial complex commercial project thereon, known or described as The Capital (Project / Complex / Scheme), consisting of commercial premises, being shops, offices and showrooms. 3. For the purpose of convenience and efficient management, running and maintenance of the project, and to hold the land and Project, and for the common object and purposes of the purchasers of the premises in the project, and to meet the requirement of law, said Service Society under the Gujarat Cooperative Societies Act 1961 has been formed and it consist of purchasers of the premises in the Project as its Members and Shareholders and the Purchaser agrees to become member of the Society. 4. It was decided by way of executing respective sale deed between the developer, M/s. Sahjanand Buildtech LLP and all the individual purchasers of premises in the scheme that: a. The Purchaser shall pay by way of Common Maintenance Fees the amount at the rate of ₹ 6.50 per square foot per month of Built-up Area for initial period of 24 months from the date/ obtaining of Building Use Permission and thereafter as may be fixed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent liability head of Balance Sheet. And, thus, it is not forming part of their income as per income tax return filed by applicant. 7. The applicant understands that advance received for initial 24 months for maintenance fees is against the future supply of maintenance services by it to their members which is covered under section 7 of CGST Act and thus has paid the GST on the same. 8. For understanding the applicability of GST on the ₹ 250/- per square foot of built -up area received from each member as Common Maintenance Fund / Deposit this advance ruling has been sought. 9. They have also submitted the Sample Copy of Sale Deed executed by the developer with all the individual purchasers of units in this commercial complex scheme and the Copy of Audited Financials along with income tax return and computation of income for Financial Year 2018-19 for the applicant. 10. In view of the above backdrops, the applicant has sought for advance ruling in respect of following questions: Question 1: Whether applicant is liable to pay GST on the common maintenance fund/deposit collected from their members? Question 2: If Yes, then, what shall be considered as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent and booked the same as Maintenance Deposit under current liability in their audited books of accounts. Further, it is not also forming part of his income as per return of income filed with the Income Tax department. Further, the intention of creating such common maintenance fund by applicant is to park such fund in form of fixed deposit and then to earn interest on the same and then use this interest income generated for common expenses of society including maintenance and renovation. As per applicant this is a form of deposit only received from the members, which is also refundable to members in case a person ceases to be member of this society. In a situation when any person ceases to be member of this society and transfers his unit/ office/ showroom in this commercial complex to other person, then that new person shall become member in his place and thus share certificates and maintenance deposit standing the name of the person who is leaving this society shall get transferred to new person who is coming in as new member of this society in his place. This transfer process take place as per the provisions given in the bylaws of society. As per the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st supply of services of maintenance/other revenue or capital expenditure of such society. For Question No:2 15. As per the above given submissions, GST is not payable at the time of receipt of Maintenance deposit thus, there is no need to ascertain the time of supply for this transaction. 15.1 If, in future at any point of time such deposit is adjusted against supply of service of maintenance then in that case GST shall be payable and time of supply shall be the date on which such deposit is adjusted against consideration receivable for supply of such maintenance services. 16. At the time of personal hearing held through Video Conferencing on 24.09.2020, the Authorised Representative of the applicant, CA Pratik P. Shah reiterated the facts as stated in the application and as mentioned herein above. DISCUSSION FINDINGS: 17. We have carefully gone through the facts of the case, written and oral submissions made by the applicant in their application for advance ruling as well as at the time of personal hearing and the applicable provisions of the GST Laws in this regard. At the outset, we would like to state that the provisions of both the CGST Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The term supply is inclusive in nature can be understood in terms of following parameters namely:- (i) Supply of goods or services. Supply of anything, other than goods or Services, does not attract GST. (ii) Supply should be made for a consideration. (iii) Supply should be made in the course or furtherance of business. (iv) Supply should be made by a taxable person. (v) Supply should be a taxable supply. Besides above parameters, GST Laws have provided certain exceptions to the requirement of supply being made for consideration and in the course of furtherance of business. 21. We, therefore, have to find whether the Common Maintenance Fund (Deposit) taken from their members on account of maintenance, repair etc. of the common amenities, facilities, services, conveniences, utilities and common infrastructure of the Scheme, constitute consideration is vis a vis any supply under the provisions of GST Acts. 22. As per Section 2(17) of the CGST Act, 2017, the term business includes the provision, by a club, association, society, or anybody (for a subscription or any other consideration) of the facilities or benefits to its members. 22.1 Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en you start a renting something etc. One needs to apply following test on amount/deposit received from customer to determine whether such deposit / amount will be taxable or not: 1. Whether amount received is refundable or not? 2. Whether such amount can be adjusted as consideration of supply? 23.1 If answer to any one question given above is NO i.e., deposit is nonrefundable or any outstanding sum of amount against supply made to customer can be adjusted from this deposit, then such deposit will be taxable under GST. Above discussion is based on the Proviso to Section 2(31) of the CGST ACT,2017 i.e . 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 supply . 24. In the instant case, we find that the applicant is a registered entity as an Association of Persons and has a legal existence separate from its members. The applicant is collecting the amounts towards Common Maintenance Fund (Deposit) @ ₹ 250/- per square foot of built-up area for future supply of services viz. maintenance, repair etc. of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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