"MAHARASHTRA AUTHORITY FOR ADVANCE RULING GST Bhavan, Room No.107, Ist floor, B-Wing, Old Building, Mazgaon, Mumbai — 400010. (Constituted under Section 96 of the Maharashtra Goods and Services Tax Act, 2017) BEFORE THE BENCH OF (1) Ms. P. Vinitha Sekhar, Addl. Commissioner of Central Tax, (Member) (2) Mr. A. A. Chahure, Joint Commissioner of State Tax, (Member) GSTIN Number, if any/ User-id 27TAAAAA43 93H1ZS Legal Name of Applicant Apsara Co-operative Housing Society Limited Registered Address/Address provided | 16 Apsara, N.C.P.A. Complex, Nariman Point while obtaining user id Bombay - 400021. Corresponding Address Details of application _ GST-ARA, Application No. 21 Dated 28.05.2019 Concerned officer Division —VIII, Commissionerate Mumbai South _| Nature of activity(s) (proposed / present) in respect of which advance ruling sought A_| Category Service Provision B_ | Description (in brief) Services undertaken by co-operative housing society. Issue/s on which advance ruling | (v) determination of the liability to pay tax on any required |. goods or services or both (vi) whether applicant is required to be registered _ _ under the Act. __ _ s) on which advance ruling is | As reproduced in para 01 of the Proceedings below. J ‘| PROCEEDINGS (Under Sed ion 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra <—iF Goods and Services Tax Act, 2017) . The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/s. Apsara Co-operative housing Society Limited, the applicant, seeking an advance ruling in respect of the following questions. 1) Whether the activities carried out by the applicant for its members qualify as \"supply\" under the definition of Section 7 of the CGST Act, 2017. 2) If the activities of the applicant are treated as \"supply\" under CGST Act, 2017 then whether the applicant has correctly discharged the GST as per the illustrative copy of the invoice generated by the Applicant? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression “GST Act” would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION — AS PER THE APPLICANT The submissions of the applicant is as under:- 21 Applicant is a co-operative housing society, registered under the Maharashtra State Co- operative Societies Act, 1960 and formed by its members who are the shareholders. The main object of the Applicant Society, as per the Bye Laws are extracted below for ready reference: a. To obtain conveyance from the Promoter (Builder), in accordance with the provisions of the Ownership Flats Act and the Rules made thereunder, of the right, ° NA jtle and interest, in the land with building/buildings thereon b %) c. {Bo |paise funds for achieving the objects of the society, e. To do all things, necessary or expedient for the attairment of the objects of the society, specified in the bye-laws. 2.2 For the purpose of achieving its objects, Applicant raises funds by collecting contributions, (also called as charges in the bye laws of Applicant Society), from members of the society. 2.3. The said charges, collected on monthly or quarterly basis, include property taxes, common electricity charges, water charges, contribution to repairs & maintenance funds, expenses on repairs and maintenance of the lifts of the society, including charges to running the lifts, contribution to sinking fund, service charges, car parking charges, interest on the defaulted 2.4 2.5 2.6 2.7 charges, repayment of the installment of the loan and interest, non-occupancy charges, insurance charges, lease rent, non-agricultural tax, or any other charges. Applicant Society uses the said funds for the specified purposes as enumerated in the bye laws, e.g., property taxes and water charges collected by the society from members is paid to the Municipal Corporation. Applicant Society does not carry out any other activity other than those mentioned in the bye laws of the society, as evident from its Annual Report and Accounts. Applicant has filed the present application for determining whether the said activities carried out by them for their members qualify as supply as defined under Section 7 (1) of the CGST Act, 2017 & liable to GST, & if so, whether they are correctly discharging their GST liability as per the illustrative invoices attached to the present application. As per Section 7(1) (a) all forms of supply of goods or services or both for a consideration in the furtherance or course of business will qualify as \"supply\" liable for GST. Thus, the supply is an inclusive definition encompassing all kinds of supply, however only those transactions which are for a consideration and in the furtheranze or course of business will qualify as supply. According to applicant’s submissions, though the definition of ‘business’, as per Section Clause (ce) of the CGST Act, 2017, includes provision of facilities or benefits to its memben , ona case to case basis it has to be determined whether any facilities or benefits have a ed been provided by the society to its members. In the present case applicant age rovide any facilities or benefits to its members. It raerely manages the housing \" Ne “y _s0Githyfand thus cannot be considered to be doing any business. ~ a= Su Pdtther, applicant has submitted that, the definition of ‘tusiness’ also fails on the 2.12 2.12.1 touchstone of the ‘principal of mutuality’. The Supreme Cour: in the number of cases has held, by applying the principals of mutuality, that a housing society cannot be said to the providing any services to its members. Thus, the activities carried out by the applicant do not amount to supply & are not liable for GST. The applicant made Additional written submissions on 07.01.2020 as under:- The activities carried out by the Applicant for its members does not amount to supply as per a plain reading of the term \"supply” under Section 7(i), and hence not liable for GST. Supply is an inclusive definition encompassing all kinds of supply, however only 3 = * 3 YS, those transactions which are for consideration and in the furtherance or course of business will qualify as supply. The society charges levied on the members as per the Bye Laws is merely a contribution towards the collective the maintenance and upkeep of the Society and cannot be considered as consideration\" as defined in Section 2(31) of the CGST Act, 2017. The Contributors do not derive any profit from the said contributions. As settled by the various Supreme Court and High Court decisions, the Members of the Society and the Society are not distinct persons. They are one and the same. Thus, there is not flow of any consideration between two distinct persons. It is merely a contribution by each Member to the Society. Thus, for this reason also, the Society Charges levied on the Members cannot be termed as “consideration”. In the definition of ‘business’ as defined in Section 2(17) of the COST Act, 2017. Clause (e) specifically provides that business shall include provision by a club, association, society, or any such body (for < subscription or any other consideration) of the facilities or benefits to its members. Applicant Society does not provide any facilities or benefits to its members. It is merely formed for managing the housing society\". Thus, the applicant society cannot be considered to be doing any business. Since Applicant Society and its members are one and the same, it cannot be said — Jogos R iiRe doing any business with its own members so as to proviaing any supply. e [x é fp af S 2.12.2 Appl nt's case is exempt from levy of GST as per the Rulings of the Maharashtra ry Ct mah Ruling Authority in the case of M/s. Lions Club of Poona Kothrud and M/s. Rotary Blub of Mumbai Western Elite. 2.12.3 Agi has further referred to the decision of Hon'ble Calcutta High Court in the case of : yA § Seflirday Club Ltd. Vs. Assistant Commissioner, Service Tax Cell, Calcutta & Ors. (2005) 180 ELT 437 (Cal HC) wherein the levy of Service Tax is struck down on services provided to members of the club. Applicant has also relied on che decision of Sports Club of Gujarat Ltd. Vs. Union of India (2010) 35 VST 375 (Gu, HC), where in the Hon'ble Gujarat HC struck down the levy of service tax. 2.12.4 In view of the above decisions, the activities carried out by Applicant Society does not 2:13 amount to supply and therefore they are not liable for payment of GST. Alternatively, without prejudice, if the Applicant Society is held to be supplying services to its members, then the invoices raised by the Applicant Society will not include the deduction claimed and exclusions made in the said invoices. 4 E = > w = * 03. 3.1 32 yoy Co rn ei 3.4 ANCE Ri CONTENTION — AS PER THE JURISDICTIONAL OFFICER The submissions made by the jurisdictional office is as under:- As per the definition of the term \"person\", in terms of Section 2(84) of the CGST Act, 2017, in the instant case, there are two distinct persons, one the Applicant Society and another is the member thereof. Though the Applicant has contended that the Applicant Society and its members cannot be treated as distinct persons, by making reference to the principle of mutuality, all court rulings cited by the Applicant were in connection with the Income Tax matters. The concern is only with the element of service, if any, rendered by the Co Operative Housing Society to its members against some consideration, which may be in the form of the monthly or quarterly charges. Therefore, the contention made by the Applicant with regard to the principle of mutuality to establish their claim that the Applicant Society and its member are not distinct entity is not ¢enable in so far as taxability in the GST regime is concerned. GST Law has given very wide connotation for services, which will cover any activity other than those involving goods, money and securities. Therefore, the activity of Applicant in as much as they are obtaining conveyance from the promoter (Builder), managing, maintaining and administering the property of the society, raising fund for achieving the z Py cts of the society, undertaking and providing any social, cultural or recreation activities either by their own account or jointly with any co-operative institution etc., can clearly be consid d as service being provided to its members. From th¢ definition of the term \"consideration\" as per Section 2(31) of the CGST Act, can be construed that membership fees collected by the Applicant from its ers is not only meant for meeting the administrative evpenses, but is also towards attaining various objects of the society as mentioned in By ‘aws of the Society. Thus, membership fee collected by Applicant from its members will ue treated as \"consideration\" paid for supply of services The term \"Supply\", defined under Section 7 of the CGST Aci, 2017 has wide connotation due to the presence of the clause \"all forms of supply of goods or services or both\". However, barring specified exceptions and instances, prescribed under Section 7 of the CGST Act, the following two conditions have been imposed ta be considered as \"Supply\" under GST Law, namely, (i) such supply should be made by a person for a 5 04. 05. 5.1 consideration; and (ii)such supply should be made in the cours2 or furtherance of business. In the instant case, it is observed that the applicant is making supply to its members and receiving consideration for the same. Further, as per the definition of \"business” provided under Section 2(17) of the CGST Act, 2017 it can clearly be concluded that the provision of the various activities by the applicant for the benefit of its members will come under the scope of business and the various services in the form of obteining conveyance from the promoter(Builder), managing, maintaining and administering the property of the society, raising fund for achieving the objects of the society, undertaking and providing any social, cultural or recreation activities either by their own account or jointly with any co-operative institution for its members has been made in the course cf business only. Both the conditions stipulated for the “Supply\" under the GST Law hav? been fulfilled which leads to the conclusion that the transaction between the Applicant end its members are nothing but supply, and accordingly will attract GST. HEARING Preliminary hearing in the matter was held on 14.11.2019. Sh. Rahul Thakar, Advocate appeared and informed the Bench that he was not carrying the concerned file for making Khobragade, Supdt., Division-VIII, Range-I, Commissione-ate Mumbai South CGST, Mumbai also appeared and made written submissions. OBSERVATIONS We have gone through the facts of the case, documents on rezord and submissions made by both, the applicant as well as the jurisdictional officer. 5.2 Applicant is a co-operative housing society, formed under the Maharashtra State Co- operative Societies Act, 1960 and dogs not carry out activities other than those mentioned in the bye laws of the society. 5.3. According to Section 2(16) of the Maharashtra Cooperative Society Act, 1960, “housing society” means a society, the object of which is to provide its members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling houses or flats are already acquired, to provide its members common amenities and services. It can be said that a co- operative housing society is body of persons, who stay in a residential/housing society. As a collective body, the society would be supplying certain services to its members, like collecting statutory dues from its members and remittir2 to statutory authorities, maintenance of the building, security, etc. 5.4. The applicant has submitted that, as a Society, their objects are : to obtain conveyance from the Promoter (Builder), in accordance with the provisions of “¢ Ownership Flats Act and the Rules made thereunder, of the right, title and interest, in the and with building/buildings thereon ; to manage, maintain and administer the property of the society; to raise funds for jeving the objects of the society, to undertake and provide for, on its own account or Act as under:- 5.5.1. As per Section 9 of CGST Act, 2017, levy of GST is on supp*/ of goods and services. 5.5.2 The word “supply”, is defined in Section 7 of the CGST Act. As per Section 7 (1) of the said Act, “supply” includes— (a) all forms of supply of goods or services or both suci as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) «.. (= @ 353 Te Afirisdictional officer that as per the definition of the term \"f2rson\", in terms of Section a (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule IIT; or (b) (3) Subject to the provisions of sub-sections (1) and (2), The term \"Supply\", defined under Section 7 of the CGST Act, 2017 is an inclusive definition and not an exhaustive one and therefore it has very wide connotations. Therefore, the activities of Applicant in as much as they are obtaining conveyance from the promoter (Builder), managing, maintaining and administering the property of the society, raising fund for achieving the objects of the society, undertaking and providing any social, cultural or recreation activities can clearly be considered as rendering of “supply” of service being provided to its members. We find from the definition of “supply” that, to be considere¢ so, such supply should be made by a person, for a consideration and should be made in the course or furtherance of business. Thus we have to find whether ; the zpplicant can be considered embers can be treated as as a ‘person’; whether the amounts collected from their 7 ‘consideration’ and finally whether such supply is made in the course or furtherance of / iad is a person within the meaning of the term in the CCST Act. We agree with the ra y 2(84) of the CGST Act, 2017, in the instant case, there are tyvo distinct persons, one the Applicant Society and another, the member thereof. Thus we ‘ind that in the subject case there is a supply made by a person i.e. the applicant. The next question which arises is whether the activities (supp!y of services) by the society ie ‘a person’, can be said to be made for a consideration. As per Section 2(31) of the CGST Act, 2017, consideration, in relation to the supply of goods cr services or both, includes any payment made or to be made, whether in money or =therwise, in respect of, in 5.8 5.9 5.12 response to, or for the inducement of, the supply of goods cz services or both, whether by the recipient or by any other person. From the definition of the term \"consideration\" as per Section 2(31) of the CGST Act, 2017, it can be construed that membership fees collected by the Applicant from its members is also meant for meeting expenses for activities undertaken by the applicant to achieve the various objects of the society as mentioned in By-laws of the Society. Thus, membership fee collected by Applicant from its members will be treated as \"consideration\" paid for supply of services The next question which arises is whether the activity of the eaciety i.e ‘a person’, can be said to be in the course or furtherance of business. The definiti:n of business as per Section 2(17) of the CGST Act, 2017 is as under: “Business” includes— rovision by a club, association, society, or any such body (for a subscription or any er consideration) of the facilities or benefits to its met. bers; (11) sesseee anenansibstanee sstsaneieieeen ‘ By, ‘as per Section 2(17) (e) of the CGST Act, 2017, ‘prov'sion by a club, association, ? ty, or any such body (for a subscription or any other consideration) of the facilities or “nefits to its members is deemed to be a ‘business’. In the sbject case, we find that the applicant is making supply to its members and receiving “onsideration for the same. Further, as per the definition of \"business” reproduced above, ‘ve also find that the various activities undertaken by the applicant for the benefit of its members will come under the scope of business. In view of the above we are of the opinion that all the conditiovs stipulated for considering the activities of applicant as “Supply\" under the GST Law have been fulfilled. Applicant has contended that the Applicant Society and its members cannot be treated as distinct persons, by citing the “principle of mutuality”. We heve already found above that i} §.13 both, the Applicant as well as its members are to be conside.ed as separate person. The contention made by the Applicant with regard to the principie of mutuality to establish their claim that the Applicant Society and its member are not distinct entity is not tenable in so far as taxability in the GST regime is concerned. We now reproduce the relevant portion of Circular Ne.109/28/2019- GST dated 22.07.2019, issued vide F. No. 332/04/2017-TRU by the Government of India which is as charges paid by residents to the Resident Welfare Association (RWA) in a_ housing society exempt | from GST and if yes, is” there an upper limit on the amourt of such charges” for the exemption to be available? below:- Sr. | Issue Clarification No. 1 Are. the maintenance | Supply of service by RWA (unincorporated body or a non- profi entity registered under any law) to its ow members by way of reimbursement of charges or share of coutribution up to ar. amount cf Rs. 7500 per month per member fr providing services and goods for the commo:: use of its members in a housing society or a’ residential complex are exempt from GST. - Prior to 25th January 2018, the exemption was available if the “harges or share of contribution did ne; exceed Rs 5000/- per month per member. “he limit was increased to Rs. 7500/- per month per member with effect from 25th January 2 [Refer clause (c) of SI. No. 77 to the notifica*fon No. 12/2018- Central Tax (Rate) dated 28.C 5.2019] Sn Sai oP ive of the said circular makes it clearly evident tha’, it is the intention of the 5.14 a) Government to tax Housing Societies under GST Laws subj-ct to the condition that the reimbursement of charges or share of contribution of the mevabers exceed an amount of Rs. 7500/- per month per member for Supply of service rerdered by Pesident Welfare Association (unincorporated body or a non- profit entity reg-stered under any law) to its own members. The applicant has submitted the following case laws in support of their contention that activities carried out by them for their members are “ot liable to GST. Decision of the Hon’ble Supreme Court in the case of Income Tax Officer, Mumbai Vs. Venkatesh Promises Co-operative Society Limited. 10 b) ¢) d) e) 5.14.1 Full Bench Judgment of the Hon'ble Guajarat High Court in the case of Commissioner of Income Tax Vs. Prabhukunj Co-operative Housing Society Ltd. Decision of Hon'ble Delhi HC in the case of Commissioner of Income Tax Vs. Talangang Co-op Group Society Ltd. Decision of Hon'ble Bombay HC in ¢ase of Sind Co-operative 3lousing Society V's Income Tax Officer. Decision of Hon'ble Calcutta HC in the case of Commissioner of Income Tax Vs. Apsara Co-operative Housing Society Ltd. Decision of Hon'ble Apex Court in the Commissioner of Income Tax, Bihar Vs. Bankipur Club Ltd. It is seen that all the case laws mentioned at (a) to (f) above p> “tain to Income Tax Matters and will not be applicable in the subject case. Applicant has also relied upon the judgements of the conceried Hon’bie High Courts in the case of Saturday Club Ltd. Vs. Assistant Commissioner, “e2rvice Tax Cell, Calcutta & Ors as well as in the case of Sports Club of Gujarat Ltd. Vs. U“ion of India (2010) 35 VST xo = HC) to ee that their activities are not li#dle to GST in view of the = dei provision was introduced with effect from 01.07.20:2, to the effect that club and are deemed to be separate persons. Lid. Vs. Assistant Commissioner, Service Tax Cell, Calcutta % Ors as well as in the case of Sports Club of Gujarat Ltd. Vs. Union of India, has been ¢ :stinguished by the Hon’ble Authority for Advance Ruling, New Delhi, Central Excise, Customs and Services Tax in respect of application filed by M/s Emerald Leisures Ltd. (Ru ing No. AARST/10/2015 in Application No. AAR/44/ST/07/20 | 4dated 11.09.2015 where‘ in paral 5 of the said order, it was held as follows:- > “The Hon'ble High Court observed thai principally there should be existence of two sides/entities for having transaction as against consideration ~ Ina members club, there is no question of two sides — members and club, both are same entity. We observe that with a1 effect from 01.07.2012, new system of taxation of services as been introduced by the Government. Besides other changes, the word ‘service’ has also been defined under Section 65B(44) of the Finance Act, 1994. Explanation 3 (a) to the said section stated that for the purposes of this Chapter, an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons. Therefore, deeming provision has been introduced with effect from 01.07.2012 to the effect that club and the members are deemed to be Separate persons. In view of these recent changes, the judgements of the Hon'ble High Courts relied upon by tae applicant, are no more applicable to facts of the case before us. Therefore, the con‘zntion of the applicant that club and its members are not two dixtinct persons, is incorrec 5.15.3 Hence the judgements of the High Courts in the Saturday Cub Ltd. case and the Sports Club of Gujarat Ltd. case are not applicabte to the facts of the present case. 5.16 Finally, we find that the applicant is also relying on the decisions of the Maharashtra Appellate Authority for Advance Ruling in the case of M/s. L'cns Cluk of Poona Kothrud, and the case of M/s. Rotary Club of Mumbai Western Elite. -1 In the case of M/s. Lions Club of Poona Kothrud, the Appellat» Authority has finally come ship fees are “being utilized only for paying Mem»ers’ meeting expenses for 4 ee f0 1 lations of policies and directions. Administrative expens-s (printing of circulars, fees E _ FSi to international office and multiple office)), office sv yplies, (stationery, postage) ey émmunication (greetings) and suck other incidental expense; for updating education for the purpose of carrying on service activities in a better manne,” 5.16.2 In the subject case, first of all there is no collection of me ~bership fees. Further, the applicant has not mentioned that they are undertaking any ac ‘4inistrative expenses. Both, collection of membership fees and utilization of the same for administrative purposes are facts of the matter in the Lions Ciub case but not in the subjec.: matter. 5.16.3 We therefore feel that the decision of the Authority in the case of M/s Lions Club, Kothrud is not applicable in the instant case. Similarly the facts in the -~ase of M/s. Rotary Club of 12 5.17 Mumbai Western Elite are different from the facts of the sucject matter. Hence the said decisions are not applicable in the subject case. ‘ The second query raised by the applicant is “If the activities o” the applicant are treated as \"supply\" under CGST Act, 2017 then whether the applicant 4as correctly discharged the GST as per the illustrative copy of the invoice generated by tk.2 Applicant?” 5.17.1 In this matter we feel it necessary first to decide whether the said question raised by the applicant is covered under Section 97(2) of the CGST Act, 2917, and thus maintainable, or liable for rejection. Having said so, we invite attention to the questions that can be posed in an application for an Advance Ruling under the provisions >f the GST Act. Sub-section (2) of Section 97 is the relevant section which is reproduced e: below: (2) The question on which the advance ruling is sought unde this Act, shall be in respect of— a. classification of any goods or services or both; b. applicability of a notification issued under the provis: ous of this Act; c. determination of time and value of supply of goods o services or both; ~~ \"e admissibility of input tax credit of tax paid or deemes to have been paid; % ie gewpether any particular thing done by the applicant v:th respect to any goods or letermination of the liability to pay tax on any goods ‘ar services or both; ether applicant is required to be registered; OS tia or both amounts to or results in a supply of goods or services or both, Sirens, within the meaning of that term. ° 5.17.2 We observe in the instant case that, the question which has been raised by the applicant is 06. not pertaining to any of the matters mentioned in Section 97 (2) of the GST Act. In other words, Section 97(2), which encompasses the questions, for the ruling by this Authority does not deal with the issue of whether the applicant has cori=ctly discharged the GST as per the illustrative copy of the hein generated. We find hat this question does not pertain to any matter in respect of which an Advance Ruling can be sought under the GST Act. Hence, it is held that this authority does not have jurisc‘ction to pass any ruling on such matters and the said question is not maintainable under ize GST Act. In view of the extensive deliberations as held hereinabove, w« pass an order as follows: 13 ORDER ~ (Under Section 98 of the Central Goodsland Services Tax Act, 2317 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 21/2019-20/B- 3 dy Mumbai, dt. . | 7 / 03/2022 For reasons as discussed in the bod, of the order, the questions are answered thus — Question 1):- Whether the activities carried out by the applicar* for its members qualify as \"supply\" under the definition of ‘Section 7 of the CGS*® Act, 2017. Answer :- Answered in the affirmative. whether the applicant has correctly discharged the GST as per the illustrative copy Question 2):- If the activities of the as are treated as \"suppl; under CGST Act, 2017 then of the invoice generated by the Applicant? Answer :- Not answered in view of discussions made above. a | ede — oe | nen A. A. CHAHURE P. VINITHA SEKHAR (MEMBER) ‘MEMBER) CERTIFIED TRUE COPY 1. The applicant 2. The concerned Central / State officer 3. The Commissioner of State Tax, Maharashtra State, Mumbai ¥ de 4. The Chief Commissioner of Central Tax, Churchgate, Mumbai MEMBER 5. Joint Commissioner of State Tax, Mahavikas for Website. ADVANCE RULING AUTHORITY MAHARASHTRA STATE MUMBAI Note :- An Appeal against this advance ‘ruling order shall be mace before “The Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax’, 15\" floor, Air India Building, Nariman Point, Mumbai— 400021. 14 "