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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST UPDATE ON TAXABILITY OF CHARGES COLLECTED BY HOUSING SOCIETY 158/2020-21

GST UPDATE ON TAXABILITY OF CHARGES COLLECTED BY HOUSING SOCIETY 158/2020-21
The determination of taxability on cooperative housing society is always a disputed point and there are many contradictory verdicts by AAR. This update seeks to discuss a recent ruling by AAAR Maharashtra in the case of M/S APSARA CO-OPERATIVE HOUSING SOCIETY LIMITED wherein the issue raised was whether the charges collected by the society amounts to supply and liable to GST and whether they are correctly discharging the GST liability for which illustrative invoices were being provided.
Appellant contended that the charges are not liable to GST in view of Supreme Court decision given in the case of Calcutta Club wherein it was held that services provided by incorporated clubs to its members is not liable to tax. The appellant contended that they are not carrying out any business in terms of section 2(17) of CGST Act, 2017, and hence their activities cannot be considered as “Supply”, as per under Section 7(1) of the CGST Act, 2017. Further, it was contended that society charges levied on the members is merely a contribution towards the collective maintenance and upkeep of the Society and cannot be considered as ‘consideration’ defined in Section 2(31) of the CGST Act, 2017 as no profit is being derived from these contributions. Reference has also been made to the decisions of Maharashtra Advance Ruling in the case of M/s Lions Club of Poona Kothurd and M/s Rotary Club of Mumbai Western Elite,wherein it was held thatif the society charges are meant towards meeting the administrative expenses of the society, the said society charges would not be construed as “consideration”. Accordingly, the society charges would not attract GST. The Appellant also referred the following Hon’ble High Court judgements to contend that the activities carried out by them would not amount to “Supply”, and hence the charges are not liable to GST:   
 
  1. Saturday Club Limited Vs. Asstt. Commissioner, Service Tax Cell, Calcutta & Ors. (2005) 180 ELT 437 (Cal HC).
  2. Sports Club of Gujarat Limited Vs. Union of India (2010) 35 VST 375 (Gujarat HC).
 
The Department has argued that the Hon’ble Supreme Court in the case of State of West Bengal & Ors. Vs. Calcutta Club Limited, wherein pertains to sales tax regime and that time concept of the term “Supply” was not prevalent. Therefore, the Apex Court Judgement will not be applicable. Reference was made to the term “business” as provide under section 2(17) of CGST Act, 2017 and ‘supply’ under section 7 of the CGST Act which have wider connotation.
After considering the submissions, Maharashtra AAAR has observed that the activities carried out by appellant is to be considered as supply in terms of Section 7(1)(a) of the CGST Act, 2017, and the same would be liable for GST subject to the condition that the monthly subscription/contribution charged by the society from its members is more than Rs 7,500 per month per member and the annual aggregate turnover of the society by way of supplying of services and goods is also Rs 20 lakh or more. It was held that the definition of the term business and supply are very wide and cover all clubs, whether incorporated or not thereby nullifying the concept of mutuality as was prevalent in erstwhile regime. As regards the issue raised for correctness of GST liability discharged, the AAAR conceded with AAR that they can only comment on determination of tax liability but not on the methodology adopted for discharging tax liability. As the second issue was outside the purview of AAR, the same was not answered.
 
This decision seeks to distinguish the ratio laid down by various High Courts and the Apex Court in the erstwhile indirect taxation regime concluding that services provided by incorporated club to its members is not liable to tax as club and members are not to be treated as separate entities due to application of principle of mutuality. However, the said analogy seems to be fade in GST era as the definition of supply, service and business are wide enough to cover services provided by incorporated/unincorporated club to its members. Therefore, the clubs will definitely face hard time to apply the benefit of decisions rendered in erstwhile regime in the GST era. AAR rulings are not even following the ratio laid down by Apex Court and High Courts. Let us wait for another round of litigation till Apex court when the matter is finally decided.

This is solely for educational purpose.

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