TMI Blog2021 (7) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... erative societies like the applicant has been settled. In view of the amended Section 7 of the CGST Act, 2017, it is found that the applicant society and its members are distinct persons and the amounts received by the applicant, against maintenance charges, from its members are nothing but consideration received for supply of goods/services as a separate entity - The principles of mutuality, which has been cited by the applicant to support its contention that GST is not leviable on the maintenance charges collected by them from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received against maintenance charges, from its members. The applicant is liable to pay GST on maintenance charges (by whatever name called) collected from its members, if the monthly subscription or contribution charged from the members is more then ₹ 7,500/- per month. - GST-ARA-113/2019-20/B-29 - - - Dated:- 13-7-2021 - SHRI RAJIV MAGOO, AND SHRI T.R. RAMNANI, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services like accounting, auditing, caretaker, etc. Presently, the applicant is raising monthly bills on its members which consist of 2 parts, one is property Tax on which GST is not being charged and another is Maintenance charges on which GST is being charged. 2.2 In GST, taxable event is determined when there is supply of goods, services or both. From the definition of the terms. Supply and business as per the GST Act. applicant s activities, consisting of upkeep and maintenance of the society and collecting money from the members do not constitute business as there is no exchange of consideration and merely reimbursement of the amount by the members for the facilities provided by the society. Also, the doctrine of mutuality would come into play as there is no supply of goods or services by the applicant to its members. 2.3 As per Section 7(1) (a) of the CGST Act. supply is an inclusive definition, so it is possible to argue that anything, even if not mentioned specifically in Sec. 7 can be treated as supply . But as per ejusdem generis, when a limited list of specific things also includes a more general class, that the scope of that more general class shall be li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bit of definition of Supply under GST. the GST Act has not specifically included tax rate for charging tax on supply under Cooperative Housing Societies. In fact it has only issued exemption notification, to exempt the value of supply made by co-operative society upto ₹ 5000/-. The Applicant vide letter dated 21.06.2021 made additional submissions as under:- 2.7.1 The Government has recently amended the GST provisions retrospectively vide finance Act 2021 by amending provisions of section 7 of CGST Act 2017. The said amendment read as under: In the Central Goods and Services Tax Act, 2017 (hereinafter referred as the Central Goods and Services Tax Act), in section 7, in sub-section (1), after clause (a), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2017, namely:- (aa) the activities or transactions, by a person, other than an individual, to their members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation .- For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icipants who are also the beneficiaries. The contributors to the common fund must be entitled to participate in the surplus and the participators in the surplus are contributors to the common fund. The law envisages a complete identity between the contributors and the participants in this sense. The principle postulates that what is returned is contributed by a member. Any surplus in the common fund shall therefore not constitute income but will only be an increase in the common fund meant to meet sudden eventualities. A common feature of mutual organizations in general can be stated to be that, the participants usually do not have property rights to their share in the common fund, nor can they sell their share. Cessation from membership would result in the loss of right to participate without receiving a financial benefit from the cessation of the membership. 3.2 CHS are covered by the definition of business as given section 2(17) of MGST/CGST Act. Therefore, they are duly bound to obtain registration, if other conditions are fulfilled. Moreover, section 7. read with Schedule I and II show that in case of related persons and distinct persons, the activity is supply even if no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treats the CHS and its members as two separate persons or entities (section 15 uses the term related persons), one as company or society or unincorporated body, and other as natural person(s). 3.7 Moreover, the definition of person as given in section 2(84) covers, natural person, company, corporation, society, and registered society. Co-operative Housing societies are covered by the definition of business. Once they provide the goods and/or services to other persons (natural persons who are co-incidentally members) then naturally such activity is liable to be treated as supply under section 7 of MGST Act. Therefore, whenever supply of goods or services effected by CHS to its members then such supply is taxable (whether consideration is given or not given by member) as section 15 read with schedule I is applicable. 3.8 Therefore, taking a cue from the principle mentioned in the Bhuwalka Steel Industries Ltd. (2017. 5 SCC 598) (para 36). considering the deeming fiction provided in section 15(1) and explanation thereof, as well as Schedule I. in respect of related persons, the Co-Operative Housing society (whether incorporated or unincorporated) and its members are liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Housing Society has been providing various services as per the bye laws under the Cooperative Act to the members then such services provided by housing society to members are liable to levy of GST by applying the provisions of related person under section 15. (viii) Alternatively such services when provided by the cooperative society to the members are also liable to levy of GST as such supply is taking place by virtue of the statutory provisions of the Cooperative act and such supplies of services are liable to be treated as taxable supply due to operation of law. 3.11 The question / issues referred by the applicant, is required to be answered in favor of revenue against the applicant Housing Society due to the submission made as hereinabove. Due to the express provisions as mentioned hereinabove as provided in MGST/ CGST Act, the housing society is required to obtain registration and pay GST in case of supply of Goods / services to members or non-members as the case may be if required threshold is crossed in terms of turnover of supply. 04. HEARING 4.1 Preliminary hearing in the matter was held on 28.05.2021. Smt. Satvinder Kaur (C.A). Authorized Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant that they are of the view that GST is not liable to be paid on the amounts received by the society them from its members because of the principle of mutuality due to which, the society cannot be considered as an entity, separate from the individual members of the society. 5.6.1 We observe that there were a lot of litigations and disputes by clubs/associations/ societies on this issue, earlier. However the said issue, with respect to Goods and Services Tax has been sought to be addressed by way of the proposed amendment made to Section 7 of the GST Act in the finance Budget, 2021. 5.6.2 Vide clause 99, an amendment was proposed in the CGST Act, 2017, whereby, in section 7, in sub-section (1), after clause (a), the following clause was to be inserted and deemed to have been inserted with effect from the 1st day of July 2017, namely : (aa) the activities or transactions, by a person, other than an individual, to their members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation ,- for the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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