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TMI Blog2023 (12) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be an Association of Persons (AOP, for short) registered with Association of Apartment Owners under the West Bengal Act XVI of 1972, whose primary functions are: (i) to raise funds; (ii) to provide for maintenance, repair and replacement of the common areas and facilities of the property and payments thereof; (iii) to provide for proper maintenance of accounts; (iv) to provide for and do any other thing for the administration of the property in accordance with the Act and bye-laws. 1.3 The applicant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant provides maintenance or repair of the common area of the apartments and surrounding which inter alia includes lighting in common area. To provide these services, the applicant collects monthly subscription as maintenance charges from its members. In addition to this, the applicant is stated to be engaged in setting up a Corpus Fund to meet future contingencies for which the applicant also collects subscription from its members. The instant application is related to taxability of such monthly subscription charges in terms of serial number 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. The other issues are in respect of liability to pay tax on amount collected for common area electricity charges and corpus fund. 2.2 Statement containing applicant's interpretation of law: * Question No. 1: Where monthly contribution charged to a member exceeds INR 7500 per month, whether the applicant can avail the benefit of Notification No. 12/2017 dated 28-6-2017 (Sl. No. 77) read with Notification No. 2/2018 dated 25-1-2018 which provide for exempting from tax, the value of supply up to an amount of Rs. 7,500 per month per member. In other word Tax wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribution up to an amount of Rs. 7,500/- per month per member for providing services and goods for the common use of its members in a housing society or a residential complex and therefore such supply is exempted from payment of tax. A.3 According to the applicant, the moot question arises whether the above exemption granted to members would be null and void if the contribution exceeds Rs. 7,500/-. In this context, the applicant has relied on the judgement by the Hon'ble High Court of Madras in the case of Greenwood Owners Association vs Union of India [2021] 128 taxmann.com 182 (Madras) wherein the Hon'ble Court has held as under: "24. The term 'up to' hardly needs to be defined and connotes an upper limit. It is interchangeable with the term 'till' and means that any amount till the ceiling of Rs. 7,500/- would exempt for the purposes of GST. 25. As regards the argument concerning slab rate, a slab is a measure of determining tax liability. The prescription of a slab connotes that income upto that slab would stand outside the purview of tax on exigible to a lower rate of tax and income above that slab would be treated differently. The intendment of the exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney. * Question No. 3: Whether the applicant is liable to pay CGST/SGST on collection of common area electricity charges paid by the members and the same is recovered on the actual electricity Charges? C.1 The value of supply for charging GST has been provided under Section 15 of the CGST Act, 2017. Section 15(5) read with Rule 33 of the CGST Rules 2017 provides the exclusion of the value of reimbursements on actual basis from the purview of taxable value under GST. C.2 Since the common electricity charges are recovered on actual basis, the same should be kept out of purview of GST. The applicant has placed his reliance on the advance ruling given by the Telengana Authority for Advance Ruling in the case of Jayabheri Orange County Owners Association. Submission of the Revenue 3.1 The submission of concerned officer from the revenue is reproduced in verbatim as under: * Question No. 1: As per Sl no. 01 & 05 of CBIC Circular No. 109/28/20 19-GST Dated 22.07.2019 - it is very clearly stated that GST will be payable on entire amount, if maintenance charges exceeds Rs. 7500- per month. * Question No. 2: The contributions are made by the members to the applicant as contributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of Notification No. 12/2017 dated 28-6-2017 (Sl. No. 77) read with Notification No. 2/2018 dated 25-1-2018 which provide for exemption from tax, the value of supply up to an amount of Rs. 7,500/- per month per member. In other words, whether tax would be charged over and above Rs. 7,500/- or the entire amount collected from members is exigible to tax. 4.3 We find that several issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members have been clarified by the Tax Research Unit, Department of Revenue, Ministry of Finance vide Circular No. 109/28/2019- GST dated 22.07.2019 [West Bengal Trade Circular No. 30/2019 dated 31.07.2019]. In regard to the issue whether tax is payable only on the amount exceeding Rs. 7500/- or on the entire amount of maintenance charges, it has been clarified as under: "The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exceed Rs. 7500/- per month per member. In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable. For example, if the maintenance charges are Rs. 9000/- per month per m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Index of April 2014 and November 2017, and accounting for the same, the adjusted limit for November 2017 based on growth in the, - General Index would be Rs 5977 Residential building and land [cost of repairs only] would be Rs 5969 Other consumer services excluding conveyance would be Rs 6076 The limit may be enhanced to Rs 6000 per month per member. Threshold may be increased to Rs 7500/. Fitment Decision Decided in favor of Rs 7500/- per month per member.' [ Agenda for 25th GST Council Meeting: Volume-2: Page: 20-21] 4.7 It thus appears that the Government intends to provide the exemption only in cases where contribution received from a member per month is below the specified limit of Rs. 7500/-. In other words, where the contribution exceeds the limit, taxability of such services by RWA shall not get covered by entry number 77 of the aforesaid notification. We are, therefore, unable to accept the contention of the applicant that in the event of the monthly contribution charged to a member exceeding Rs. 7,500/- per month, tax is payable only on the differential amount. 4.8 The second question is related to the liability of GST on the amounts collected for corpus fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption of electricity for the common utilities is in the name of the applicant. The applicant is not involved in the supply of electrical energy to the members but is involved in providing the services of upkeep and maintenance of the common utilities of the apartments. According to the officer concerned from the revenue, such value is a part of the consideration for the supply of services to its members and hence is liable to tax at appropriate rates. 4.11 In Circular No. 206/18/2023-GST dated 31.10.2023, it has been clarified that 'where the electricity is supplied by the Real Estate Owners, Resident Welfare Associations (RWAs), Real Estate Developers etc., as a pure agent, it will not form part of value of their supply. Further, where they charge for electricity on actual basis that is, they charge the same amount for electricity from their lessees or occupants as charged by the State Electricity Boards or DISCOMs from them, they will be deemed to be acting as pure agent for this supply.' 4.12 In the instant case, admittedly the applicant collects the electricity charges consumed for common area from its members on pro-rata basis. In course of hearing, the authorized represent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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