2021 (11) TMI 399 - AAR - GST

Supply of goods or services or both - Construction of building on the plot allotted by MHADA - co-operative housing society registered under the Maharashtra State Co-operative Societies Act, 1960 - ITC on input and inputs services for repairs, renovations rehabilitation works carried out by the Applicant - HELD THAT - A housing society is a collective body of persons, who stay in a residential society and the collective body, supplies certain services to its members, like collecting statutory dues to be remitted to statutory authorities, or maintenance of the building, etc. As per section 2(17)(e) of the CGST Act, 2017 provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members is deemed to be a business. Thus, a housing society may be seen to be providing club and association services to its members but does not provide works contract service to its members. The housing society i.e. the applicant in the subject case, is making provisions of the facilities/benefits to its members and is not providing any works contract services to its members and therefore the applicant is debarred from taking Input Tax Credit under the provisions of Section 17 (5) (c) of the CGST Act, 2017.

Summary

Issues Involved:

1. Whether the activities carried out by the applicant for its members qualify as "supply" under Section 7 of the CGST Act, 2017.
2. Whether the applicant is liable to obtain registration under the GST law.
3. Whether the applicant is eligible to claim the Input Tax Credit (ITC) on input and input services for repairs, renovations, and rehabilitation works carried out by the applicant.

Issue-Wise Detailed Analysis:

Issue 1: Whether the activities carried out by the applicant for its members qualify as "supply" under Section 7 of the CGST Act, 2017.

The applicant, a co-operative housing society, argued that the activities carried out for its members do not amount to "supply" as defined under Section 7(1) of the CGST Act, 2017. They contended that the society does not provide any facilities or benefits to its members but merely manages the housing society, which does not qualify as "business" under Section 2(17) of the CGST Act. They further argued that based on the principle of mutuality, the activities of the society do not constitute a supply liable for GST. However, this issue was withdrawn by the applicant during the hearing.

Issue 2: Whether the applicant is liable to obtain registration under the GST law.

This issue was also withdrawn by the applicant during the hearing.

Issue 3: Whether the applicant is eligible to claim the ITC on input and input services for repairs, renovations, and rehabilitation works carried out by the applicant.

The applicant sought an advance ruling to determine if they are eligible to claim ITC on GST paid to the contractor for works contract services used for repairs, renovations, and rehabilitation. They argued that under Section 16(1) of the CGST Act, 2017, they should be entitled to ITC as the services were used in the course or furtherance of business. They further contended that the restriction on ITC under Section 17(5)(c) and (d) should not apply since the works contract services received were used for providing further works contract services to its members.

Discussion and Findings:

The authority examined the eligibility criteria for ITC under Section 16(1) and the restrictions under Section 17(5) of the CGST Act, 2017. It was noted that Section 17(5)(c) debars ITC on works contract services when supplied for construction of an immovable property except where it is an input service for further supply of works contract service. The applicant argued that they are providing further works contract services to their members, thus qualifying for ITC.

However, the authority found that the applicant, as a housing society, is not providing works contract services to its members but rather facilities or benefits, which do not qualify as works contract services. Therefore, the applicant is debarred from claiming ITC under Section 17(5)(c).

Order:

The authority ruled that the applicant is not eligible for Input Tax Credit in the subject case where the contractor has provided works contract service for repairs, renovations, and rehabilitation works.