The Maharashtra Appellate Authority for Advance Ruling (AAAR) for GST has reiterated that services provided by housing societies would attract GST subject to certain conditions.

Mumbai-based Apsara Co-operative Housing Society was collecting monthly or quarterly charges to manage, maintain and administer the property, and for other activities as prescribed in the Society by-laws. The charges included property tax, water and common electricity charges, as well as car parking charges.

The Finance Ministry’s circular says the Resident Welfare Association would be required to pay GST on monthly subscription/ contribution charged from its members, only if such subscription is more than Rs 7,500 per month per member and the annual aggregate turnover of RWA by way of supply of services and goods is Rs 20 lakh or more.

The AAAR observed that the activities carried out by Apsara Co-operative Housing amounted to supply in terms of Section 7(1)(a) of the CGST Act, 2017, and the same would be liable for GST subject to the condition that the monthly subscription/contribution charged by the society from its members is more than Rs 7,500 per month per member and the annual aggregate turnover of the society by way of supplying of services and goods is also Rs 20 lakh or more.

With this the AAAR has upheld the ruling passed by the State’s Advance Ruling Authority (AAR). The Finance Ministry’s circular dated July 22, 2019, states that GST is payable on the amount charged by a RWA for providing services and goods for the common use of its members in a housing society or a residential complex. However, a dispute arose on account of a Supreme Court ruling in the case of the West Bengal government and Calcutta Club, wherein the apex court said that the service provided by the club does not attract GST. Also, there was an issue whether the housing society was carrying out any business or not.

The Housing Society said that the definition of services under the Finance Act 1994 is essentially the same as supply of services under GST Law. Since this would apply to the present case, the activities carried out by it would not qualify as services and hence it was liable to pay GST. It also cited various court judgements to claim that clubs or societies cannot do any business with its members, hence society charges would not attract GST.

However, the Tax Department said that the SC ruling relates to the Sales Tax regime where the concept of supply was not prevalent. It also said that collecting fees for attainment of objectives as prescribed in the Society’s bylaws is nothing but business and activities carried out by the appellant do amount to supply, and hence are liable for GST.

AAAR said: “Provision of any facilities or any benefits by a club, association or society to its members against a subscription or any other consideration would be construed as business.” Since the housing society is providing services against the consideration, named as ‘society charges’ in the furtherance of business, hence activities would be supply and attract GST.

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