TMI Blog2019 (9) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... or it might be crossing the GST registration threshold limit of ₹ 20 lakhs. The supply of water is actually to the RWA and the applicant is trying to split the contract into maintenance agreement and MOU to avoid the GST to facilitate RWA in order to keep the maintenance charges paid by the residents below ₹ 7500/- . Further, it has also been observed that water charges collected from the individual residents are on the basis of per sq feet (size of the flats), instead of per tanker of water, which is similar to the collection of the maintenance charges collected by the RWA - it is quite evident that supply of water in MOU and supply of maintenance services in maintenance agreement are to the same RWA and relevant to each other, hence it is evident that there is no case of direct supply of water by the applicant to the individual resident of the society. - HAR/HAAR/R/2019-20/08 - - - Dated:- 13-9-2019 - (Sangeeta Karmakar) Member CGST and (Madhubala) Member SGST Present for the Applicant : Tarun Kumar Sharma (CA) Ankit Awal (CA) 1. Brief submission of the applicant: 1.1 M/s Ashiana Maintenance Services LLP, 8th Floor, Block-1, Vatika Busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for operation of generator; c) Proportionate costs of water for use in horticulture, sanitation and other common use as per actuals. 1.7 As per the applicant, the cost of water used in common area is a part of maintenance charges received by the applicant. 1.8 Clause 7 of the Maintenance Agreement provides that the supply of water to individual units in the Project shall be undertaken by Haryana Shahari Vikas Pradhikaran (for short 'HSVP') and till the appropriate infrastructure for supply is developed by HSVP, the Applicant shall supply such water through water tankers procured from the market. For this purpose, it envisages entering into a separate MOU, draft of which forms part of Annexure-I of the Maintenance Agreement, with the members and collection of advance water charges by the Applicant from members. All expenses for arranging water tankers cost of water and distribution thereof to individual members is to be met from such advance charges. Further, once HSVP starts supplying water, water charges for each unit shall be collected from occupier of each unit on proportionate basis as per the rates fixed by HSVP. 1.9 In pursuance of above, the Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e costs towards water and electricity used in the common areas, as provided in Clause 6.3.3. However, the supply of water to individual units in the project is not within the scope of activities to be carried out by the Applicant under the Maintenance Agreement. Such supplies are totally separate and independent of the activities carried out by the Applicant under the Maintenance Agreement. While Clause 6.3.3 of the Maintenance Agreement is clear to restrict the reimbursements to water/ electricity consumed in the common area, Note-2 in Schedule-I further provides that the cost of maintenance dues does not include repair/ maintenance within the unit and individual power bills. 1.16 Such mutual understanding of the parties is further enforced by Clause 7 of the Maintenance Agreement, which deals with supply of water in the individual units. 1.17 Clause 7.1 provides that the supply of water is to be undertaken by HSVP, which will be able to supply such water only after completion of requisite infrastructure under its water supply scheme. It further provides that till such infrastructure is developed by HSVP, the Applicant shall supply water to the units through water tankers pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unit, such charges shall be amortized on monthly basis, as provided in Clause 4 read with Clause 7, based on overall consumption of water by the residents. 1.25 In the instant case, the Applicant is to provide management and maintenance services to the buyers under the Maintenance Agreement. Clause 10.6 of the Flat Buyer Agreement provides that the Buyer will enter into a separate Maintenance Agreement. The buyer will accordingly enter into the Maintenance Agreement with the Applicant. Under the Maintenance Agreement, the Applicant is required to manage and maintain the project including the common area. The Applicant is required to undertake a variety of activities including sanitation, horticulture, operation and maintenance of water/power supply, security etc. For such activities, e Maintenance Agreement envisages payment of maintenance charges to the Applicant, in addition to the reimbursements of proportionate costs towards water/ electricity used in the common area. 1.26 The role of the Applicant under the Maintenance Agreement is limited to the aforesaid activities, like any other Maintenance Agency. The water and electricity to individual units is to be supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sought by the applicant, and relevant facts. 3.2 While going through the submissions we observe that the applicant proposes to engage in business of providing maintenance services with the housing society for which they enter into an agreement. The applicant provides maintenance services for maintenance of common area and levies GST for provision of such services. 3.3 It has been submitted by the applicant that they are providing maintenance services to Residential Welfare Association (RWA) i.e. Asiana Anmol Owners Association which was formed for common interest of all intending buyers. Thus, it is clear that the applicant is providing services to RWA which is further providing services to the individual flat buyers. 3.4 The applicant also submitted that they are going to enter into another contract i.e. MOU with residents of the society for supply of water. The applicant has submitted that in course of the aforesaid MOU they will purchase water tankers from the open market and subsequently supply the same to the individual residents of the society. Here, the applicant is unable to establish that how they will supply the water tankers to individuals when there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil Nil 3.7 Further, 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:- A number of issues have been raised regarding the GST payable on the amount charged by a Residential Welfare Association for providing services and goods for the common use of its members in a housing society or a residential complex. The same have been examined and are being clarified below- Sl.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 ₹ 7500 per month per member for providing services and goods for the common use of its members i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the water received by the RWA is used for multiple purposes i.e. gardening, washing, cleaning and for the use in the apartments etc. and is stored in the common underground water tank which is maintained by the RWA. 3.9 In view of the above, it is clear that the applicant have bifurcated the services provided to 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 lakhs. 3.10 Further, it has also been observed that, in general each society consists of many residential towers, and 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 said MOU, because the apartments do not have their own separate water storage tanks. 3.11 Therefore, in other words supply of water is actually to the RWA and the applicant is trying to split the con ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
