GST on maintenance charges of co-operative societies

GST on maintenance charges of co-operative societies
GST on maintenance charges of co-operative societies, GST on maintenance charges of co-operative societies, Business Registrations and Filing of Returns
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*South Mumbai society loses GST appeal, tax is payable on maintenance*
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*_The appellate bench has upheld the previous ruling that goods and services tax (GST) is to be levied and collected on maintenance charges if these exceed threshold limits._*
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*November 15, 2020*
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South Mumbai society loses GST appeal, tax is payable on maintenance. MUMBAI: The efforts of a posh Nariman Point cooperative housing society (CHS) in filing an appeal against an earlier order of the GST Authority for Advance Rulings (AAR) have proved futile.
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The appellate bench has upheld the previous ruling that goods and services tax (GST) is to be levied and collected on maintenance charges if these exceed threshold limits.
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Like any other CHS, this south Mumbai society collected maintenance charges from its members for its current and future upkeep and paying various bills such as property taxes, common electricity charges, water charges and so on.
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TOI had analysed AAR’s ruling, in its July 14 edition. According to the circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on July 22, 2018, a CHS has to levy and collect GST (current rate is 18%) on the entire sum of maintenance charges, if these exceed Rs 7,500 per month, per member. Smaller CHS with an annual turnover of Rs 20 lakh or less do not have to register under GST. Thus, they do not have any GST obligation, irrespective of the quantum of maintenance charges.
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The AAR had held the CHS’s activities towards its members have to be a ‘taxable supply’ under the GST laws. Referring to the circular, the AAR had held the government’s intention to tax the CHS under GST laws is clear.
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Aggrieved by this ruling, the south Mumbai CHS had filed an appeal with the GST Appellate Authority for Advance Rulings (AAAR), Maharashtra bench.
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In its appeal, it stated AAR had based its ruling on the circular and notifications issued by CBIC, which led it to conclude the government intends to tax all transactions between a CHS and its members.
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It further pointed out various judicial decisions had not been considered by AAR, including that of the Supreme Court passed in the 2009 case of Calcutta Club which dealt with the ‘principle of mutuality’. Based on this principle, the society and its members are not distinct entities and thus the activities of the CHS do not constitute a ‘supply’ and hence do not attract GST. It added the society’s charges cannot be treated as a ‘consideration’ under Section 2 (32) of the GST Act.
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The AAAR, in its order dated November 5, though, set aside these contentions. It agreed with the GST authorities that the Supreme Court’s order will not apply, for various reasons, including the fact that it pertained to a sales tax regime, where the concept of ‘supply’ that exists under GST laws was not prevalent. The appellate bench held that under the GST Act, the term ‘supply’ and ‘business’ have a wide meaning and cover the activities of a CHS carried out for the benefit of its members. A profit motive is also immaterial under the GST Act, it stated.
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Advance rulings are binding on the applicant (in this case, the Nariman Point-based CHS) but they have a persuasive value in other similar cases. A government official told TOI that the recent order by the AAAR will strengthen the stand of the GST authorities, who have always been following the CBIC circular.

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(1) GST (Goods & Service Tax) Registration; (2) Registration of FSSAI, DIN, Shop, TAN (Ind), TAN (Org) (3) Registration under Shops & Establishment Act; (4) Registration of TAN, (5) Registration of (DSC) Digital Signature Certificate; (6) Registration of Trade Mark; (7)  Registration of Proprietorship; (8)  Registration of Partnership; (9) Registration of OPC; (10) Registration of Company; (11) Registration of IEC; (12) Filing of Income Tax Returns; (13) MSME Registration; (14) Udyog Aadhar Registration; (15) Filing of GST Returns; (16) Change in Directors details; (17) Closing of Company; (18)  Commencement of business (Form-20A); (19) DIR KYC-3; (20) Surrender of DIN (21) Registration of FSSAI; (22) GST Glossary; (23) GST Transactions (24) E-Way Bill (25) Transition to GST (26) Supply under GST (27) GST Returns Basics (28) Simplified GST Returns (29) Input Tax Credit (30) GST Invoicing (31) Composition Scheme (32) Reverse Charges (33) GST Accounting (34) Payment of GST (35) GST Compliance Rating (36) GST Procedures (37) Penalties in GST (38) GST Exemptions (39) GST Basics (40) CENVAT Credit in GST (41) Tax Invoice (GST) (42) Bill of Supply (GST) (43) Delivery Challan (GST) (44) Credit Note (GST) (45) Debit Note (GST) (46) Bill of Entry (GST) (47) Shipping Bill (GST) (48) Provision of Aadhar Authentication in GST Registration (49) Reply to show cause notice GST REG-18

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