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TMI Blog2022 (11) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... Near Mahavir Nagar, Kandivali (West), Mumbai-400067 ("hereinafter referred to as "the Appellant") against the Advance Ruling No. GST-ARA-19/2021-22/B-94 dated 10.11.2021, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). ? BRIEF FACTS OF THE CASE 3.1 The Appellant is a co-operative housing society (hereinafter referred to as the "Appellant Society") registered under the Maharashtra State Co-operative Societies Act. 1960. 3.2 The Appellant society has constructed a building on the plot allotted by MHADA. The Appellant Society in its Bye Laws, amongst other thing, contains following objects:- a) To manage, maintain and administer the property of the society; b) To raise funds for achieving the objects of the society, c) To undertake and provide for, on its own account or jointly with a co-operative institution, social, cultural or recreative activities. 3.3 Thus, the Appellant society is formed by its members who are the shareholders of the ' society, with the object of managing, maintaining and administering the property of the society. 3.4 For the purpose of achieving the above objects of the society, the Appellant societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant is liable to obtain registration under the GST law? c) If the activities of the applicant are treated as "supply" under the CGST Act, 2017 then whether the applicant is eligible to claim the ITC on input and inputs services for repairs, renovations & rehabilitation works carried out by the Applicant? 3.12 The Appellant Society, thereafter, at the time of personal hearing withdrew the questions at (a) and (b). However, the Appellant had argued on the question at (c). 3.13 The MAAR, vide its order No. GST-ARA-19/2021-22/B-94 dated 10.11.2021, has determined the question of eligibility of ITC against the Appellant society and held that Appellant society is not eligible for ITC in view of the restrictions imposed under Section 17(5)(c) of the CGST Act, 2017. 3.14 Being aggrieved by the said order of the MAAR dated 10.11.2021, the Appellant has filed the present appeal on the following grounds which have been enumerated herein below: GROUNDS OF APPEAL 4. The Appellant is providing works contract services to its members along with other services. 4.1 That the clause (e) of section 2(17) of the CGST Act, 2017 specifically provides that business shall include provision by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business definition. However, the MAAR has failed to appreciate the above position of law. 4.7 The above can be also explained by way of an example. If the Housing Society is providing any service to its members in addition to services covered by Chapter Heading 9995, the said supplies may be composite supply or mixed supply. The tax treatment of the composite supplies or mixed supplies shall be as per Section 8 of the CGST Act. 2017. 4.8 In the present case, along with the regular membership service, the Society is also providing the works contract service. The said works contract service is a separate line item in the invoice where GST is charged separately by the Appellant. 4.9 The Appellant Society is receiving works contract service and further supplying works contract service. The Appellant society and its members have agreed to provide the works contract service to its members. Thus, the entire basis of the impugned advance ruling order is bad in law and needs to be set aside. 5. The Appellant shall be eligible to claim ITC on the input and input services received by the Appellant Society. The Appellant shall be eligible to claim the ITC of GST charged by M/s. Uniqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the Section 16(1). The denial of ITC can be only if there is blockage of credit under Section 17. In the present case there will be no blockage of credit of the reasons explained herein below. 5.9 Restrictions of Input tax Credit: Section 16(1) provides that every registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business 5.10 However, Section 17(5) (c) and (d) provide as under: "Notwithstanding anything contained in sub-section (1) of section 16 and sub section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- C. works contract services when supplied for construction of an immovable property (other than Plant and Machinery) except where it is an input service for further supply of Works contract service" . d. Goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation- For the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Act, 2021. Appellant Society is deemed to be a distinct entity from its members and all the works contract service received by the Appellant Society is used for providing further works contract service to its members. Thus, the said restrictions of Section 17(5) shall not be applicable in the present case. 5.14 Alternatively, without prejudice, the said repairs, renovations and rehabilitation for plant and machinery shall be entitled as ITC to the Appellant Society. 6. Alternatively, without prejudice the Appellant has submitted that in general, on a plane reading of section 17(5)(d) it is inferred by the authorities that, what is contemplated and provided for a particular situation where inputs are consumed in the construction of an immovable property, which is meant and intended to be sold as immovable property post issuance of completion certificate does not attract any levy of GST. Consequently, in such a situation, there is a break in the tax chain and therefore there is full justification of denial of input tax credit, as on the completion of the construction, no GST would at all be payable and therefore no set off of the input tax credit would be required or warranted o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act. 2017. He further drew the attention towards the ruling pronounced by the MAAR wherein the MAAR has classified the building repair and renovation services undertaken by them as club or association services being provided to the members, and not the works contract services, and accordingly, denied the ITC of the tax paid on the works contract services received by them in terms of the provisions of clause (c) of section 17(5) of the CGST Act, 2017. In this regard, he contended that no definition of the 'club' or 'association' services has been provided under the GST law. He further contended that since they are collecting and paying GST at the applicable rate of 18% on the amount charged from their members for the supply of the renovation and repair services of the society building, they are rightly eligible to claim the ITC of the tax paid on the input works contract services. Moreover. He also contended that they are acting as a provider of the works contract services for their members. 10. During the course of the aforesaid personal hearing, when the Hon'ble Bench enquired about the copy of the Agreement/ work order entered between the Appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from their contractor in term of the provisions of section 16 read with the exclusion clause provided under section 17(5)(c) of the CGST Act, 2017. 14. As regards the aforesaid moot issue and the contention made by the Appellant in this regard, we would first like to examine the general activities/functions entrusted upon a Co-operative Housing Society. In this regard, the Appellant have submitted that their main objectives and duties as per the Bye-laws of the society are as under:- (i) To manage, maintain and administer the property of the society; (ii) To raise funds for achieving the objects of the society; (iii) To undertake and provide for, on its own account or jointly with a co-operative institution, social, cultural, or recreational activities; 15. The Appellant further submitted that for the purpose of achieving the above objects of the society, the Appellant society raises funds by collecting contributions from the members of the society. The said contributions are also called as "charges" in the bye laws of the Appellant Society. They further submitted that the charges to the society members includes properly taxes, water charges, common electricity cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehabilitation of the society as the said services of repair, renovation, and rehabilitation of the society building would be covered under the aforesaid functions entrusted upon the Appellant society in terms of the society's Bye-law. 17. Moreover, the Appellant's contention of providing the works contract services to their members is not acceptable on another ground that society provides many services, such as security services, cleaning services, repair and maintenance services, etc., for which they recover the cost from their members under the head "maintenance charges", and the Appellant society are not claiming to be provider of the aforesaid services and charging for the said services under different heads. To elaborate further, it is observed that they are not claiming that they are providing security services or cleaning services, or repair and maintenance services, and the like. Further, they are not recovering the cost of such services under the separate heads specified for such services. Thus, it is clearly evident that they are trying to take this stand of providing works contract services to their members solely to avail ITC of the tax paid to the contractor o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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