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TMI Blog2021 (7) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... ranges to pay for the ancillary services like accounting, auditing, caretaker, etc. Presently, the CHS 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. Hence we seek opinion on the chargeability of GST on such transaction since there could be no sale by the Co-operative Housing Societies to their own permanent members, for doctrine of mutuality would come into play. To elaborate, CHS treated itself as the agent of the permanent members in entirely and advanced the stand that no consideration passed for the services rendered by the society to its members and there was only reimbursement of the amount by the members and therefore no GST could be levied. At the outset, we would like to make it clear that the provisions of both, the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made is made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. further to the earlier, henceforth for the purposes of this Adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted to mean that all the services by housing societies. other than those specified in Notification No. 12/2017 are liable for GST. 2.4.3 Further the Tax Research Unit (TRU), Government of India issued Circular No. F.No. 332/04/2017 dated 05-09-2017 containing Frequently Asked Questions (FAQs) w herein it is stated that. "Sinking fund, repairs & maintenance fund, car parking charges. Non-occupancy charges or simple interest for late payment, attract GST, as these charges are collected by the RWA/Co-operative Society for supply of services meant for its members." 2.5.1 In the case of The Cosmopolitan Club, Madras. The Youngmen's Indian Association. Madras and the Lawley Institute. Ootacamund, the Hon'ble Supreme Court held that a member's club cannot be made subject to the provision of the Sales Tax Act concerning sales, because the members are joint owners of all the club property. Supply of article to a member at a fixed price by the club cannot be regarded as a "sale". 2.5.2 The various High Courts of the country in the cases of Sports Club of Gujarat Limited and Ranchi Club Limited have held Service Tax levy to be illegal on the principle of Mutuality. 2.5.3 Further, the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members against the subscription amount charged. Thus, it was concluded that the appellant was not doing any business. 2.9 As can be seen by the definition under the GST Act. 'consideration' necessarily requires consideration flowing from one person to another. There must be consideration for an activity to be termed as business. Even as per section 7 of CGST Act. supply must be for a consideration. In Calcutta Club Ltd. case, it has been observed by the Hon'ble Supreme Court that there is absence of consideration between club and its members, as consideration is a must and should pass from one person to another. Applying the same in the present case, the definition of business cannot fasten GST liability on a club rendering service to its members as there is no consideration. 2.10 Section 7 (1A) of CGST Act, Schedule II only classifies the transaction as supply of goods or services and does not deem it to be supply. Schedule II does not cover any incorporated clubs or associations and therefore cannot fasten GST Liability on a club or association. 2.11 In view of the above, charging of GST by Cooperative Housing societies to its members is totally unfair and beyond the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ordinary situation, the supply of goods or services made against the consideration by supplier to the recipient, who is related person, would be liable to be treated as supply [u/s 7(c)], Therefore, natural corollary of provisions of section 15 / schedule I, is that in ordinary situation where consideration is received by supplier from recipient (who coincidentally is also a related person as defined in section 15). for the supply of goods or services made by him, then such supply is obviously be a liable to be treated as "supply". Section 15 of MGST Act has provided the comprehensive definition of term related person to be applied under MGST Act so as to treat the supplier and recipient as two different and distinct persons if they are covered by the said provision. 3.5 The definition of business as given in section 2(17)(b) makes it clear that "Provision by a Co Operative Housing Society, Club, association, society, or any such body (for a subscription, or any other consideration) of the facilities or benefit to its member" is business activity. Therefore, every CHS, whether incorporated or un-incorporated, is required to obtain the registration under MGST Act if the limit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f definitions of "business" and "person" as provided in section 2 of MGST Act /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. (ii) Alternatively & simultaneously such transactions of supply of service by Co-Op Housing Society to its members / non-members are covered by the "statutory supply" of service as provided by the provisions / bye-laws according to the provision of Maharashtra Co-Op Housing Society Act-1960. (iii) Housing society is body corporate and hence is conducting business of rendering of services as per bye laws is duty bound to get registered under MGST/CGST Act. (iv) The member of the society can be an individual or company or trust. The qualification of the member is also prescribed in the bye laws and in accordance with the provisions of the Cooperative Act. Membership of any members can be cancelled by following the provisions of the bye law. Therefore, the member of cooperative society is separate and distinct entity than the housing society as the qualification has been prescribed for becoming member of the cooperative society under Cooperativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from members of its society. 5.3 The applicant, has broadly submitted that : they collect amounts from its members against property tax on which GST is not being charged and against 'Maintenance charges' on which GST is being charged : its activities, consisting of upkeep and maintenance of the society do not constitute business as envisaged under the GST Act: because of the doctrine of mutuality there is no supply of goods or services by the society to its members and the Supreme Court, in the Calcutta Club Limited case has held that clubs are not entitled to charge, collect and pay taxes on any services sales made to its members on the grounds of principle of Mutuality. 5.4 The jurisdictional officer, on the other hand, has contended that cooperative housing societies are covered by the definition of business as given under the provisions of the GST Act; transaction of supply of services by a Co-Op Housing Society to its members is covered by transaction taking place between "related persons" as provided in Section 15 of GST Act ; if supply of service or goods takes place in case of related persons or distinct persons, then such activity is 'supply' even if it is not accompa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort 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. 06. In view of the above discussions, we pass an order as follows: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 113/2019-20/B-29 Mumbai, dt. 13.07.2021 For reasons as discussed in the body of the order, the questions are answered thus Question: - Determination of the liability to pay GST on Maintenance charges. Emerald Court Co-op Housing Society Ltd is a Co-operative Housing Society (CHS). It looks after the upkeep of the society and its members. The CHS provides services to its members in the form of facilities or benefits like security, cleaning, repairs, water, common electricity etc. It also arranges to pay for the ancillary services like accounting, auditing, caretaker, etc. Presently, the CHS is raising monthly bills on its members which consist of 2 parts, one is property tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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