GST applicable only on amount exceeding Rs 7,500 collected by RWA, says Madras HC
The Madras High Court has ruled that only an amount in excess of Rs 7,500 per month per member collected by Residential Welfare Associations is taxable under the GST Act.
It set aside an order by The Tamil Nadu Authority for Advance Ruling (AAR) in 2019, that if the amount collected by a registered housing society/resident welfare association exceeds Rs7,500 per month per flat, Goods and Services Tax of 18% is payable on the entire amount and not on the difference amount.
The High Court also quashed a circular by the Central Board of Indirect Taxes and Customs (CBIC) that GST would be applicable on the entire maintenance amount if it exceeds Rs7,500 per month per person, which was issued post the AAR verdict. The AAR order was in response to a clarification sought by TVH Lumbini Square Owners Association, Purasawalkam.
TVH Lumbini Square Owners Association, Greenwood Owners Association and Oceanic Owners Association from House of Hiranandani, Egattur and one individual resident had moved the Madras High Court on the issue.
The resident had argued that while a contribution of Rs7,500 or less would entitle the concerned assessee to be exempt from GST, if the contribution exceeded Rs7,500 there was an automatic disentitlement.
The Madras High Court said there is no ambiguity in the language of the exemption provision in this case.
