The West Bengal Authority for Advance Ruling ( AAR ) in a recent matter before it ruled that the Residential Welfare Association ( RWA ) functioning within an Apartment facility shall not be liable to pay Goods and Service Tax ( GST ) when the membership fees levied on their members are below Rs.7,500/- per month
Fortune Estates Association of Apartment Owners (Fortune Estates) a RWA registered under the West Bengal Apartment Ownership Act, 1972 sought an Advance Ruling under the provisions of Section 97(2)(b) of the GST Act pertaining to the applicability of a notification issued under the provisions of the Act.
Fortune Estates is engaged in the business of providing services procured from third parties to its own members; charges for the rendering of such services are reimbursed by means of charges or share of contribution retrieved from the members on a monthly basis.
The query raised before the AAR was whether Serial No.77 of Notification No.12/2017-CT(R) encompassing “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” would be applicable in the Applicant’s case where the monthly maintenance amount received from members are below Rs.7,500/-
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It was further averred by Fortune Estates that the aforementioned provision of Notification No.12/2017-CT(R) is silent on the chargeability of GST in the event that the payment rendered by the constituent members are different, varying between being lesser or higher than Rs.7,500/-.
The two-member Bench of AAR comprising Dr Tanisha Dutta, Joint Commissioner, CGST & CX
and Joyjit Banik, Additional Commissioner, SGST observed that the multiple queries raised by the Applicant before AAR all pertain to the same issue and may be answered in summarization.
AAR laid reference to Circular No. 109/28/2019- GST dated 22.07.2019 issued by the Tax Research Unit, Department of Revenue, Ministry of Finance wherein it was clarified that the GST exemption as per Notification No.12/2017-CT(R) is entirely member-specific meaning that if one member pays charges less than Rs.7,500/- per month, then that payment may be exempt from GST.
Likewise, if a member pays an amount higher than Rs.7,500/-, then the RWA shall be liable to pay GST on the said amount paid by the member
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Concludingly, the AAR ruled that the Applicant RWA shall not be liable to pay tax on the amount which is collected from its members by way of reimbursement of charges or share of contribution where such amount does not exceed Rs.7,500/- per month per member.
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