2019 (7) TMI 1160 - AAR - GST

Levy of GST - Quantum of abatement - monthly maintenance charges payable by a Member of the association - If the monthly maintenance charges payable by a Member of the association exceeds ₹ 7,500 per month, the applicant is liable to pay GST only on the amount in excess of ₹ 7,500 or on the entire amount? - S.No. 77 of N/N. 12/2017 - Central tax (Rate) dated 28.06.2017 as amended by N/N. 2/2018 - Central Tax (Rate) dated 25.01.2018. HELD THAT - In the instant case , this exemption is applicable only if the service by the applicant , a resident welfare association/ housing society to its members by way of reimbursement of charges or share of contribution ,for sourcing of goods or services from a third person for the common use of its members, is up to an amount of 7500 rupees per month per member. In the event the charges or share of contribution goes above 7500 rupees per month per member, such service will not fit the above description and hence, such service is not exempt. Such services are then fully chargeable to GST at the applicable tax rate. Any service either falls within the scope of the description in column (3) or it does not. If a service by the applicant to its members by way of reimbursement of charges or share of contribution ,for sourcing of goods or services from a third person for the common use of its members, is such that it is above 7500 rupees per month, it squarely falls outside the description of Sl No 77 (c) of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended for CGST and of Sl.No. 77 (c) of Notification No. II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as amended for SGST - GST at appropriate rates are to be charged on the full amount of reimbursement of charges or share of contribution.

Summary

Issues Involved:
1. Interpretation of exemption limit under Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 2/2018-Central Tax (Rate).
2. GST liability on maintenance charges exceeding ?7,500 per month.

Issue-wise Detailed Analysis:

1. Interpretation of exemption limit under Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 2/2018-Central Tax (Rate):

The applicant, a residential welfare association, sought clarification on whether GST is payable on the entire amount of monthly maintenance charges exceeding ?7,500 or only on the amount in excess of ?7,500. The relevant exemption is provided under Sl.No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, amended by Notification No. 2/2018-Central Tax (Rate) dated 25.01.2018, which states: "Service by an unincorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution up to an amount of ?7,500 per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex."

The applicant argued that GST should be charged only on the amount exceeding ?7,500, citing the language of the notification and supporting documents like CBIC E-Fliers and FAQs from TRU.

2. GST liability on maintenance charges exceeding ?7,500 per month:

The Authority examined the submissions and found that the exemption applies only if the monthly maintenance charges do not exceed ?7,500 per member. If the charges exceed this amount, the entire amount becomes liable to GST. The notification's language does not support partial exemption; it either fully exempts services up to ?7,500 per month or fully subjects services exceeding this amount to GST.

The ruling clarified that if the monthly maintenance charges exceed ?7,500, the entire amount is subject to GST at the applicable rate. The interpretation that only the excess amount over ?7,500 should be taxed was deemed incorrect.

Conclusion:

The Authority ruled that if the monthly maintenance charges payable by a member exceed ?7,500, the entire amount is subject to GST, not just the amount exceeding ?7,500. The exemption under Sl.No. 77 (c) of Notification No. 12/2017-C.T.(Rate) does not apply if the charges exceed ?7,500 per month. Therefore, CGST and SGST at appropriate rates must be paid on the full amount of maintenance charges.