Property tax, electricity charges etc. to be excluded for calculating exemption limit of Rs. 7,500 by housing society: AAR

Case Details: Authority for Advance Rulings, Maharashtra Mahindra Splendour CHS Ltd., In Re - [2022] 135 taxmann.com 71 (AAR - MAHARASHTRA)

Judiciary and Counsel Details

• • Rajiv Magoo and T.R. Ramnani, Member

Facts of the Case

The applicant was a housing society whose main objects were managing, maintaining and administering its property; raising funds for achieving the said objects etc., by way of collecting contributions/charges from members of the society, like Property taxes, Maintenance charges, Water and electricity charges etc. It filed an application for advance ruling to determine taxability of amount collected under GST.

AAR Held

The Authority for Advance Ruling observed that the applicant society and its members are distinct persons and the various charges received by the applicant from its members are nothing but consideration received for supply of goods/services as a separate entity. The exemption as per the entry No. 77 of the Notification No. 12/2017 CT (R) would be available only when a member’s contribution per month is up to an amount of Rs. 7,500. A member, who shall contribute an amount which is more than Rs. 7,500, would not be eligible for the exemption under entry No. 77 and the entire contribution amount would be liable to be taxed. However, the charges collected by society on account of property tax, electricity charges and other statutory levies would be excluded while calculating the exemption limit of Rs. 7,500.

Case Review

• • State of West Bengal v. Calcutta Club Ltd. [2019] 110 taxmann.com 47/76 GST 614 (SC) (para 5.3.13) and Greenwood Owners Association v. Union of India [2021] 128 taxmann.com 182 (Mad.) (para 5.4.5) distinquished.
  • Commissioner of Customs (Import) v. Dilip Kumar & Co. [2018] 95 taxmann.com 327/69 GST 239 (SC)followed.

List of Cases Referred to

• • Ranchi Club Ltd. v. Chief Commissioner of Central Excise & Service Tax [2012] 22 taxmann.com 217/36 STT 64 (Jharkhand) (para 2.5),
  • Cricket Club of India Ltd. v. CST [2015] 62 taxmann.com 2 (Mum. – CESTAT) (para 2.5),
  • Sports Club of Gujarat Ltd. v. Union of India [2013] 35 taxmann.com 557/40 STT 486 (Guj.) (para 2.5),
  • State of West Bengal v. Calcutta Club Ltd. [2019] 110 taxmann.com 47/76 GST 614 (SC) (para 2.5),
  • Tahnee Heights CHS Ltd. v. Commissioner of CGST [Appeal No. ST/85823 to 85827 of 2018, dated 12-10-2018] (para 2.5),
  • Rotary Club of Mumbai Queens Necklace, In re [2020] 117 taxmann.com 449/80 GST 515 (AAAR – Maharashtra) (para 2.8),
  • Asstt. Commissioner Central Tax v. Lions Club of Poona Kothrud [2019] 111 taxmann.com 135/78 GST 346 (AAAR – Maharashtra) (para 2.8),
  • Rotary Club of Mumbai Western Elite, In re [2019] 110 taxmann.com 182/76 GST 825 (AAR – Maharashtra) (para 2.8),
  • Greenwood Owners Association v. Union of India [2021] 128 taxmann.com 182 (Mad.) (para 2.23),
  • Commissioner of Customs (Import) v. Dilip Kumar & Co. [2018] 95 taxmann.com 327/69 GST 239 (SC) (para 5.4.3)
  • Forest County Co.-Operative Housing Society Ltd., In re [2021] 130 taxmann.com 373/87 GST 675 (AAR – Maharashtra) (para 5.5.6).