GST leviable on maintenance charges collected by a co-operative housing society from its members
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Name of Applicant: |
Emerald Court Co-operative Housing Society Limited |
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Appeal No.: |
GST-ARA-113/2019-20/B-29 |
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Ruling pronounced by: |
GST AAR Maharashtra |
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Date of Ruling: |
13-07-2021 |
Brief Facts:
- The applicant is a registered entity under GST and provides services to its members in the form of facilities like security, cleaning, repairs, water, common electricity etc. The applicant is raising monthly bills on its members which consists of 2 parts, one is property tax on which GST is not being charged and another is “Maintenance Charges” on which GST is being charged.
- The applicant argued that since the applicant is a co-operative society and is providing services to its members, there can be no supply of services by a co-operative society to its members, as it and its members are not distinct entities. The doctrine of mutuality would come into play in this case. Further, there is no exchange of consideration and the members are merely reimbursing for the costs incurred by the society on their behalf.
- In view of above, charging of GST by co-operative housing societies to its members is totally unfair and beyond the actual concept of charging GST in business activities.
Question before Authority
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Question |
Observations |
Ruling |
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Whether GST is chargeable on maintenance charges collected from members of housing society |
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Co-operative Housing Society is liable to charge GST on maintenance charges recovered from its members, if the monthly contribution is in excess of Rs. 7500 per month from each member. |
Conclusion: The Authority took into consideration the amendment made with retrospective effect for rendering the above ruling. AAR made it clear that the co-operative housing society and its members shall be treated as separate persons for the purpose of GST and therefore the principle of mutuality shall not affect any more on this issue. Hence, co-operative housing societies shall be liable to charge GST on maintenance charges recovered from its members. It should also be kept in mind that the law itself has allowed exemption for smaller societies with turnover of Rs. 20 Lakhs or less from registration and GST compliances. Further, the societies charging contribution upto Rs. 7,500 per month from its members shall also be exempted from GST obligations.
At the end of this article, we would like to bring another interesting High Court ruling to knowledge of the readers on the same issue where Madras High Court on 1st July, 2021 in the case of Greenwood Owners Association vs. Union of India [WP No. 5518 & 1555 of 2020] held that: Only contributions by members in excess of Rs. 7,500 shall be liable for GST. If contribution by member is Rs. 10,000, GST shall be chargeable on only Rs. 2,500 (i.e. excess of Rs. 7,500).
