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2023 (3) TMI 1166 - AAAR - GSTTaxability under CGST Act - receipt of a gratuitous payment from an outgoing member for the time he has resided in the society - no corresponding service being provided separately by the tax payer society - HELD THAT - In the instant case, outgoing member of the society, Mr Sanjay Prakash Sahjwani, has made payment of Rs 17,70,000/- to the society which appellant claims to be voluntary contribution on his own will and volition. On bare perusal of the affidavit submitted by the appellant in respect of an outgoing member by the name Mr. Sanjay Prakash Sahjwani mentions that the amount of Rs 17,70,000/- is being given towards Building Betterment Fund . It is clearly stated in the affidavit that the said amount is inclusive of GST. Further, the appellant has also submitted a copy of the Affidavit of Shri Chandresh Thakker, Treasurer of the Appellants Society, before the MAAR. On bare perusal of the affidavit submitted by the Treasurer, it is clear that the amount given by the outgoing member Mr. Sanjay Prakash Sahjwani (towards Building Betterment Fund ) has been transferred by the Appellant Society towards Major Repair Fund . Appellant accounted the said transaction of Rs 17,70,000/- in its books of accounts on 7-3-2020 under the accounting head Major Repair Fund and has reported Net amount of Rs 15,00,000, CGST 9% of Rs 1,35,000/- and SGST 9% of Rs 1,35,000/-. Appellant has also received transfer premium of Rs 29,500/- 25,000 Net 2250 CGST 2250 SGST from the outgoing member Mr Sanjay Sahjwani which Appellant has accounted in its books of account on 7-3-2020. The appellant is trying to give a colour of voluntary and gratuitous payment for amount received from a Transferor/Outgoing member which is collected and will be used for carrying out Major Repairs in future as is evident from the Affidavits submitted by the outgoing member Mr Sanjay Sahjwani and Shri Chandresh Thakker, Treasurer of the Appellant Society. Accounting entries in the books of accounts also supports the view taken by MAAR. The observations of MAAR agreed upon, that the said contribution by the outgoingmember is nothing but Advance amounts paid to the society for services carried out or to be carried out for the members of the Society and is therefore taxable as per the GST Laws.
Issues Involved:
1. Whether the charges received by the applicant towards upkeep and maintenance from its members are covered under Sec 7 of the CGST Act. 2. Whether the receipt of a gratuitous payment from an outgoing member for the time he has resided in the society be taxable under the CGST Act, 2017. 3. Whether major repairs to be made in the future for the co-operative housing society, for which amounts are collected, be taxable at all and at what point. Summary: Issue 1: Charges for Upkeep and Maintenance The appellant withdrew this question during the preliminary hearing, and it was not discussed by the Maharashtra Authority for Advance Ruling (MAAR). Issue 2: Receipt of Gratuitous Payment from Outgoing Members The appellant argued that payments made by outgoing members are voluntary and not consideration for services provided by the society. They cited various legal precedents and provisions of the CGST Act to support their contention. However, MAAR held that these payments are not voluntary donations but are made in gratitude for services received during the member's stay. MAAR referred to the Model Bye Laws of the Co-operative Housing Societies in Maharashtra, which prohibit additional amounts towards donations or contributions from transferors or transferees. MAAR concluded that the payments are consideration for services rendered and are taxable under GST laws. The Appellate Authority upheld this ruling, emphasizing that the payments are advance amounts for services to be provided, such as major repairs, and thus taxable. Issue 3: Taxability of Amounts Collected for Future Major Repairs This question was also withdrawn by the appellant during the final hearing and was not discussed by MAAR. Order: The Appellate Authority confirmed and upheld the Advance Ruling by MAAR, dismissing the appeal filed by the appellant.
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