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TMI BlogGST on Resident Welfare AssociationsX X X X Extracts X X X X X X X X Extracts X X X X ..... GST on Resident Welfare Associations X X X X Extracts X X X X X X X X Extracts X X X X ..... p to an amount of (Five thousand during 01/07/2017 till 24/01/2018, enhanced to Seven Thousand Five Hundred with effect from 25/01/2018, vide notification number 02/2018 CT Rate dated 25/01/2018) rupees 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 would be exempt from GST. 2. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the monthly maintenance charges collected from members is within the limit prescribed, there are no issues. The cases where the maintenance charges of a month exceed 7500, the question arises whether GST is applicable on the excess amount over and above 7500 or on the entire amount. A plain reading of the relevant text on the basic exemption notification would reveal that only the excess amount ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and above 7500 would attract GST as it is mentioned that exemption is applicable up to 7500 per member per month. 3. However, the AAR, AAAR as well as proper officers took a stand that exemption from GST is applicable only in cases where the maintenance charges per month does not exceed 7500 and as and when it is above 7500, the entire amount would attract GST. 4. Attention is invited to CBIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular on this subject bearing number 109/28/2019 GST dated 22/07/2019 wherein S.No. 5 of the clarifications is suggesting that exemption is available only when the maintenance charges are less than 7500 and the example states that on a maintenance charge of 9000 per month, GST is applicable on full amount of 9000 and not on excess over 7500 which is 1500. 5. The Madras High Court examined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above issue on 01/07/2021 and held that only the charges over and above 7500 per month per member would attract GST and accordingly quashed both the order of the AAR as well as the Circular. Reference GREENWOOD OWNERS ASSOCIATION, OCEANIC OWNERS ASSOCIATION, M/S. TVH LUMBINI SQUARE OWNERS ASSOCIATION VERSUS THE UNION OF INDIA, PRINCIPAL CHIEF COMMISSIONER OF GST AND CENTRAL EXCISE, THE UNIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N OF INDIA, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, CHENNAI - 2021 (7) TMI 591 - MADRAS HIGH COURT. 6. Aggrieved by the above order, REVENUE went on appeal and the DIVISION BENCH, vide their order dated 07/10/2021 held that this issue requires detailed examination and accordingly stayed the applicable portion of the order dated 01/07/2021. Reference UNION OF INDIA VERSU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S GREENWOOD OWNERS ASSOCIATION - 2022 (4) TMI 976 - MADRAS HIGH COURT. 7. It appears that the outcome is yet to come in the case of UNION OF INDIA VERSUS GREENWOOD OWNERSC ASSOCIATION and accordingly issue is not settled as we are not sure about the final decision. 8. Madras High Court has held in another case on 13/09/2019 that only the charges over and above 7500 would attract GST vide ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation TVH LUMBINI SQUARE VERSUS UNION OF INDIA - 2020 (3) TMI 1035 - MADRAS HIGH COURT 9. Due to the contrary views as above, there are two categories of tax payments are happening now. One category pays GST on amount collected whenever it exceeds 7500 per month per member on entire amount and other category is paying only on the amount which exceeds 7500 per month per member. 10. The next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is which is the correct method. Going by the language of the exemption notification as well as the views of the Madras High Court as discussed in paras 05 and 08, only the contribution which exceeds 7500 per month per member would attract GST. However, the second view that exemption is meant for middle income group only and the moment monthly recovery per month per member exceeds 7500, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire amount would attract GST is the view of the CBIC which is evident from the language of the Circular dated 22/07/2019. 11. RWA who pay GST on entire amount wherever the same exceeds 7500 per month per member are very safe on two counts. One, there would not be any further demand of GST in future. Two is the RWA are entitled to avail more ITC as the restrictions contained in 17 (2) would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not affect them as the taxable portion of the turnover would be higher. Anyway, RWA are bound to incur expenditure on many common inputs or input services which allows them better utilization of ITC. 12. As GST law is already administered by CBIC only and as they focus mainly on REVENUE, they may go to the extent of even retrospective amendment to ensure that the entire amount is subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST whenever monthly charges exceed 7500 per member. Accordingly, RWA who pay GST only on amount exceeding 7500 per month per member may revisit their approach so as to improve the ITC utilization as well as to avoid possible litigation. X X X X Extracts X X X X X X X X Extracts X X X X
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