No Exemption to RWA when maintenance charges exceed Rs.7,500: AAR

The Authority of Advance Ruling (AAR West Bengal) in the matter of M/s PRINSEP ASSOCIATION OF APARTMENT OWNERS has held that No Exemption to RWA when maintenance charges exceed Rs.7,500.

The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:

(1) Where monthly contribution charged to a member exceeds INR 7500 per month, whether the applicant can avail the benefit of Notification No. 12/2017 dated 28.06.2017 (Sl. No. 77) read with Notification No. 02/2018 dated 25.01.2018 which provide for exempting from tax, the value of supply up to an amount of Rs. 7,500 per month per member? In other words, whether tax would be charged over and above INR 7500 or the total amount collected from members.

(2) Whether applicant is liable to pay CGST/SGST on amounts which it collects from its members for setting up a corpus fund for future contingencies/ major CAPEX. Whether such fund from members will come under the definition of supply and liable to be taxed?

(3) Whether the applicant is liable to pay CGST/SGST on collection of common area electricity charges paid by the members and the same is recovered on the actual electricity charges?

RULING

1. The exemption is not available when the maintenance charges exceed Rs. 7,500 per month per member. Where the charges exceed Rs. 7500 per month per member, the entire amount is taxable.

2. The amount collected by the applicant from its members for setting up a sinking fund is an advance payment towards future supply of services and the applicant is, therefore, liable to pay tax on such supply.

3. Amount collected on account of common area electricity charges, being a part of composite supply, is taxable in cases where the supply of common area maintenance services as provided by the applicant fails to qualify for exemption under serial number 77 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

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