TMI Blog2022 (11) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of their Bye-laws. Accordingly, they have been levying 18% GST on the taxable components of the charges collected by them from their members. The same is evident from the invoices submitted by them along with the subject appeal memorandum. Here, although the Appellant have not mentioned, on their invoices, the SAC (Service Accounting Code) of the services being provided by them to their members, it is worthwhile to mention that all the said underlying services provided by the Appellant-society will be covered under the heading 9995 enumerated at SI. No. 33 of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 having the description services of membership organization , as all the underlying services including the services related to building repair and renovation for which the Appellant society is charging, from their members, a contribution towards the building repair fund arc being supplied in the capacity of the cooperative society only, which is nothing but a membership organization. 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 secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act. 2. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act. 201 7 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as CGST Act and MGST Act ] by M/s. Mahavir Nagar Shiv Shrushti Co-op. Housing Society Limited, Plot No. Ph-1, RDP 12 13, CTC No. Ac-1/1, Link Road, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal Memorandum. 3.10 The Appellant Society, under the assumption of law that the activities of the society for its members amounts to supply, had obtained registration under GST. 3.11 The Appellant society had filed the impugned Advance Ruling Application dated 07.07.2021 for determining following three questions:- a) Whether the activities carried out by the applicant for its members qualify as supply under the definition of Section 7 of the CGST Act, 2017. b) Whether the 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 eligi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be prescribed and shall be paid by the taxable person. 4.6 The Central Government has notified the rate of tax on supply of services in Notification No. 11/2017 - C.T (R) dated 28.06.2017 and the Annexure thereto as amended from time to time. Further the classification of the supply of services will be done as per the Explanatory Notes to the Scheme of Classification of Services. In other words, the classification of the services and the applicability of the rate will be determined as per the above notifications and not as per the clause (e) in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 16(1). 5.6 Though the services provided by contractor qualify as works contract, it will have no bearing on the eligibility of the ITC to the Appellant society. 5.7 Further, entry 6(a) in Schedule II to the CGST Act provides that Works Contract under Section 2(119) shall be treated as supply of service''. 5.8 The contract given for repairs, renovations and rehabilitation of the building which is an immovable property and thus, it may come under the definition of Works Contract and hence treated as works contract service. However, the Appellant Society shall be entitled to ITC in view 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-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is against the principle of VAT and GST. further it is also resulting in taxing of the member's money twice as ultimately the housing society is nothing but contribution by the members. 5.13 The Appellant society has used the works contract services provided by the contractor to provide further works contract service. The Appellant society is the main contractor as far as the members is concerned and the contractor is the sub-contractor. The Appellant submits that it has stepped into the shoes of the main contractor for providing the said works contract services to its members. Especially, after the amendment brought about in the Finance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PERSONAL HEARING 8. The personal hearing in the matter was conducted on 28.07.2022 in the virtual mode via Video Conferencing, which was attended by Shri C.B. Thakar, Advocate, on behalf of the Appellant, wherein the Appellant reiterated all their earlier submissions made before the Appellate Authority. 9. Shri Thakar, in the aforesaid personal hearing, contended that the Appellant are eligible to avail the ITC of the tax paid on the works contract services received by them in respect of the repair and renovation work of the society building in terms of the provisions of section 16(1) read with exception clause incorporated under clause (c) of section 17(5) of the 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 &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, M/s. Unique Rehab Pvt. Ltd., which carry out the said repair, renovation, and rehabilitation work of the society. In this regard, the main contention of the Appellant is that since they are receiving services in the nature of works contract from their appointed contractor, and rendering the same without altering its characteristics to the members, therefore, their activities in this regard will also be construed as works contract services. Further, they contended that since they are providing works contract services to their members and charging GST at the prescribed rale of 18% thereon, accordingly, they are eligible for ITC of the tax paid on the works contract services being 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:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut a membership organization. Our view in this regard is also substantiated by the set of objectives and duties of the Society as prescribed under their Bye-laws, which has been reproduced in para 14 above, which clearly states that the society's core function is to manage, maintain and administer the society property for which it raises the required fund by charging to its members. They further submitted that they do not undertake any other activities apart from the activities envisaged under the said Bye-laws. Thus, we do not agree with their contention wherein they are arguing that they are providing works contract services to their members while undertaking the task of repair, renovation, and rehabilitation 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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