Held: The exemption of Rs. 7,500/- in terms of entry no. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, is applicable for maintenance charges collected from members. The benefit of exemption up to Rs. 7,500/- is applicable on per flat basis, when members have more than one flat. The exemption of ` 7,500/-, in terms of entry no. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, on maintenance charges charged by a Resident Welfare Association (RWA) from, resident is available only if such charges do not exceed Rs. 7,500/- per month per member. In case the charges exceed Rs. 7,500/- per month per member, the entire amount is taxable. The electricity charges paid for power consumed towards common facilities and separately recovered from members is liable to GST as consideration received for the supply of maintenance services to the members. The Corpus Fund or Sinking Fund collected from members is not to GST, as it amounts to deposits received towards future supply of services to members (No. KAR-ADRG 42/2019 dt. 17th September
Prestige South Ridge Apartment Owners’ Association ( 2019) AIFTP Times -Nov- P.7 (Karn) (AAR)
GST – AAR-Karnataka
“Applicability of GST over and above Rs. 7,500; GST on reimbursement of electricity charges; GST on collection of sinking fund / corpus fund.”
OFFHAND (To catch up ; though late than never) :
The narration of the Ruling by AIFTP, – albeit adverse to ‘taxpayer’, -is too brief to be misleading. For, that has failed to even make a mention of the principal and fundamental proposition – why the claim for tax exemption of the ‘housing association’ by invoking the overriding common law principle, – ‘the doctrine of mutuality’ is entitled to be allowed, without the need to go into the other subsidiary points raised.
The Ruling, in any case, has turned out to be adverse to the petitioner; but without due consideration of the above proposition/ point raised from all its angles – mainly the plethora of court decisions (“PRECEDENTS”); not cited, argued and addressed by the AR (a CA) , hence not gone into by the AAR.
All the more intriguing and highly detestable is that has been cited, very wrongly, rather impetuously so, even in some of the recent Articles/ Writeups given publicity for taxpayers’ consumption, pre and post 2020-21 Amendment of the GST Law, alike!?
There has been no knowing /not been ascertainable despite a search, whether the subject Ruling has been contested before AAAR or court; and if yes, – unless pending as yet, – the final outcome!?!?
Any Expert HELP to be of eminent guidance?