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The Applicant, a Co-operative housing society, raised funds by collecting contributions / charges from the members of the society. The charges included property tax, water tax, electricity charges, parking charges, etc. The said charges were collected by the Applicant periodically by issuing invoices and the charges so collected were used for specified purposes as enumerated in the Bye-laws of the Society.
The Applicant had sought a ruling before the Maharashtra AAR inter alia to ascertain whether the activities carried out by them would amount to supply and whether the same would be liable under GST. The Maharashtra AAR had observed that the services by the Applicant were being carried out for a consideration in the course of furtherance of business and therefore liable to GST.
Aggrieved, the Applicant had preferred an appeal against the order of the AAR before the Maharashtra AAAR. The Maharashtra AAAR took note of the nature of the activities carried out by the Applicant as mentioned in the Bye-Laws and observed that the same are entirely oriented towards providing services to its members and therefore are covered under the definition of business.
The AAAR further took note of the judgement of the SC in Calcutta Civil Club Limited [Civil Application No. 4184 of 2009] relied upon by the Applicant. It was observed by the AAAR that in the said case, the SC had held that the club cannot be said to be doing any business with its members as both the members and the club are one and the same owing to the principle of mutuality. It was observed by the AAAR that the said judgement was made in relation to sales tax, the provision of which are entirely different from GST and therefore, the same cannot be applicable in the instant case.
The AAAR further observed that ‘service’ under the CGST Act has been rendered a very wide connotation and ‘person’ as defined under CGST Act includes both ‘incorporated and unincorporated clubs and thus clarifies that both these deeming fictions convey the intention of the legislature to do away with the principle of mutuality.
It was further observed by the AAAR that Notification No. 12/2017 – C.T. (Rate) dated 28 June 2017 stipulates that services by an unincorporated body or a non-profit entity to its members for Rs. 7,500/- per month per member is exempt from GST. Thus, implying that any amount, exceeding Rs. 7,500/- per month per member would be subject to GST provided that the aggregate turnover of such society in a F.Y. exceeds Rs. 20 lakhs.
Basis the above observations, the AAAR upheld the order of the AAR holding that the activities carried out by the Applicant would amount to supply liable for GST subject to the prescribed conditions.
Apsara Co-Operative Housing Society Limited [Order No. MAH/AAAR/RS-SK/28/2020-21 dated 05.11.2020]
The question relating to GST applicability on Co-operative housing society has been rather persistent right from the beginning of GST. As rightly noted by the Maharashtra AAAR, GST has surely widened the scope of the term ‘supply’. In this regard, it would be pertinent to note that the Maharashtra AAR in the case of Rotary Club of Mumbai Elite [2019 (30) G.S.T.L. 60] had held that charges collected by the Club would be considered as ‘supply’ u/s. 7 of the CGST Act and therefore liable to GST.
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
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