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TMI Blog2024 (4) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... the said funds. So, it is pertinent to refer that the contributions towards the sinking/corpus fund are made by the members of the RWA with a presumption that such funds will be used for bearing the burden of expenses of future supply of services like common area maintenance and other future contingencies as may arise. This contribution is thus an acceptance of the offer of guarding future burden of expenses as made by the RWA, i.e. the appellant in this case to its members. This money is never refunded back to the members but is always in the possession of the RWA for bearing such expenses. Hence, such contribution is not of the nature of a deposit in the truest sense of the term but an advance payment made by the members of the RWA for receiving a supply of common area maintenance services to be provided to them by the RWA in future. As a result, the same would be taxable and the appellant will be liable to pay tax at the time of receipt of such amount in accordance with the provisions of sub-section (2) to section 13 of the GST Act. Tax on electricity charges received by the RWA - It is observed that the appellant has collected the electricity charges consumed for common area fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 77 of Notification No. 12/2017 dated 28.06.2017 read with Notification No. 02/2018 dated 25.01.2018. ii) On amounts collected from the members for setting up a corpus fund for future contingencies/ major CAPEX. iii) On collection of common area electricity charges paid by the members and the same is recovered on the actual electricity charges. 4. The WBAAR while giving the ruling observed that the threshold of Rs. 7500/- is applicable for the benefit of exemption under entry in Serial No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 specifically iterates that the Government intends to provide the exemption only in cases where contribution received from a member per month is below the specified limit of Rs. 7500/-. In other words, where the contribution exceeds the limit, taxability of such services by RWA shall not get covered by entry number 77 of the aforesaid notification and tax will be leviable on the entire amount collected from the members. Regarding the second issue, the WBAAR observed that a sinking fund is created in order to meet future contingencies e.g., to meet the expenses for structural repairing, reconstruction work etc. RWA creates a sinkin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of consideration , the appellant has argued that in the instant case the corpus / sinking fund is the amount collected towards the future supply of Service if any which is not ascertainable at the time of collection of the fund. Thus, the fund so collected will be applied as a consideration towards supply of services only at the time of actual supply of services. In view thereof, the amounts collected towards Corpus/Sinking Fund shall not be considered as advance for the purpose of levying GST rather the amount collected shall be leviable to GST when the same is applied as consideration at the time of actual supply of service. ii) A clarity is sought for as to whether GST is payable for future transactions if the appellant recovers the electricity charges on actual basis. 5. The appellant had relied upon the ruling of Gujarat AAR in the matter of M/s. The Capital Commercial Co-op. (Service) Society Limited [2021 (47) G.S.T.L 488 (AAR - GST - Guj)] where the Authority held that amount collected towards Common Maintenance Fund is liable to GST but the same is liable to GST at the time of actual supply of service. The appellant reiterated the same view in his written submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The essence of a deposit is that there must be a liability to return it to the party by whom or on whose behalf it is made on the fulfillment of certain conditions. [emphasis added]. Thus the most essential criterion of a deposit is that it is temporarily kept in custody of another person which is refunded/returned to the depositor after a certain period of time. But, here in this case, such money is not refunded to the contributors. 9. In this context, the sub-clause (a) to clause (31) of section 2 of the GST Act regarding the definition of consideration may be referred to: (31) consideration in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; [emphasis added] 10. Now, as per the ICAI Guidance Note on Terms Used in Financial Statements [GN(A) 5 issued 1983], published by The Institute of Chartered Accountants of India, a Sinking Fund is a fund created for the repaym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance of premise, as the case may be, and the supply of electricity is an ancillary supply as the case may be. Even if electricity is billed separately, the supplies will constitute a composite supply and therefore, the rate of the principal supply i.e., GST rate on renting of immovable property and/or maintenance of premise, as the case may be, would be applicable. ii) where the electricity is supplied by the Real Estate Owners, Resident Welfare Associations (RWAs), Real Estate Developers etc., as a pure agent, it will not form part of value of their supply. Further, where they charge for electricity on actual basis that is, they charge the same amount for electricity from their lessees or occupants as charged by the State Electricity Boards or DISCOMs from them, they will be deemed to be acting as pure agent for this supply. 13. In this case, it is observed that the appellant has collected the electricity charges consumed for common area from its members on pro-rata basis. Further, the tax invoice issued in this case for Common Area Maintenance shows a consolidated amount under SAC 999598 where a fixed rate is levied per square feet of the area of the flat. Tax @ 18% has also bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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