In a setback to a Nariman Point cooperative housing society (CHS), the GST-Authority for Advance Rulings, Maharashtra, has held that its activities towards its members was “taxable supply” under the GST Act. In other words, GST must be levied and collected on maintenance charges, if they exceed the threshold limits. The CHS had relied on the ‘principle of mutuality’ to argue that it did not ‘supply’ any service to its members.
According to a government circular issued on July 22, 2019, a CHS has to levy GST (current rate is 18%) on the entire sum of maintenance charges if they exceed Rs 7,500 per month, per member. Smaller societies having an annual turnover of Rs 20 lakh or less do not have to register under GST. Thus, they do not have any GST obligation, irrespective of the quantum of maintenance charges.
Referring to the circular, the AAR said it makes clear the government’s intention to tax housing societies under GST laws. Advance rulings are binding on the applicant and have a persuasive value in other similar cases.