Society can claim ITC proportionately despite of availing exemption available to residential units.
Input tax credit— Section 17 of CGST Act— In the instant case, the applicant is is a 'housing society' registered under the Maharashtra Co-operative Society Act, 1960. The applicant collects maintenance charges from its members and does not charge GST on amount collected towards government dues (such as property tax, education fund, etc.).
Questions raised for advance ruling are as follows—
1. According to circular number 109/28/2019 GST dated 22nd July 2019, Resident Welfare Association (RWA) shall be required to pay GST on monthly subscription contribution charged from its members, only if such subscription is more than INR 7,500 per month per member and aggregate annual turnover of RWA by way of supplying services and goods is also INR 20 Lakhs or more. In case of the society, though annual turnover is more than INR 20 Lakhs, monthly maintenance per month per member is less than INR 7,500. But the society also has 68 commercial shops, 233 residential flats and 18 garages. Hence, the society does not contain only residential flats. In view of this please confirm whether the society can stop paying GST and surrender the registration.
2. According to circular number 109/28/2019 GST dated 22Thi July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. But as per section 17 (5)(c), ITC shall not be available, when works contract services supplied for construction of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Collective reading of not cation and section 17(5)c), gives contradiction picture to the extent of major repair work carried out with respect to immovable property. Hence, the society wants to understand if the registration is to be continued then whether the society can claim ITC on repairs both major as well as minor.
3. According to circular number 109/28/2019. GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. The society claims exemption of INR 7,500 available to residential unit and hence, it does not claim ITC on various services availed such as professional fees, bank charges, insurance premium, stationery items purchased, repair and maintenance, security charges, Cable Services etc. Please provide your opinion whether the society can claim ITC on these services either fully or proportionately despite of availing exemption available to residential units.
Held that— This Authority does not deal with the issue of whether a GST registration should be surrendered. Hence, it is held that this authority does not have jurisdiction to pass any ruling on question no.1.
In respect of question no. 2, the works contract service for supply of above mentioned goods and service is covered under Section 17(5)(c) read with explanation mentioned therein. Therefore, ITC on GST paid on above said works contract service will not be available to the extent of capitalisation as mentioned in Explanation of Section 17(5) of the CGST Act, 2017.
In respect of question no. 3 the provisions of Section 17 (2) will be applicable in the present case in as much as when goods or services or both are used by the applicant partly for effecting taxable supplies under the GST Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies.
Society can claim ITC proportionately despite of availing exemption available to residential units.
Input tax credit— Section 17 of CGST Act— In the instant case, the applicant is is a 'housing society' registered under the Maharashtra Co-operative Society Act, 1960. The applicant collects maintenance charges from its members and does not charge GST on amount collected towards government dues (such as property tax, education fund, etc.).
Questions raised for advance ruling are as follows—
1. According to circular number 109/28/2019 GST dated 22nd July 2019, Resident Welfare Association (RWA) shall be required to pay GST on monthly subscription contribution charged from its members, only if such subscription is more than INR 7,500 per month per member and aggregate annual turnover of RWA by way of supplying services and goods is also INR 20 Lakhs or more. In case of the society, though annual turnover is more than INR 20 Lakhs, monthly maintenance per month per member is less than INR 7,500. But the society also has 68 commercial shops, 233 residential flats and 18 garages. Hence, the society does not contain only residential flats. In view of this please confirm whether the society can stop paying GST and surrender the registration.
2. According to circular number 109/28/2019 GST dated 22Thi July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. But as per section 17 (5)(c), ITC shall not be available, when works contract services supplied for construction of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Collective reading of not cation and section 17(5)c), gives contradiction picture to the extent of major repair work carried out with respect to immovable property. Hence, the society wants to understand if the registration is to be continued then whether the society can claim ITC on repairs both major as well as minor.
3. According to circular number 109/28/2019. GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. The society claims exemption of INR 7,500 available to residential unit and hence, it does not claim ITC on various services availed such as professional fees, bank charges, insurance premium, stationery items purchased, repair and maintenance, security charges, Cable Services etc. Please provide your opinion whether the society can claim ITC on these services either fully or proportionately despite of availing exemption available to residential units.
Held that— This Authority does not deal with the issue of whether a GST registration should be surrendered. Hence, it is held that this authority does not have jurisdiction to pass any ruling on question no.1.
In respect of question no. 2, the works contract service for supply of above mentioned goods and service is covered under Section 17(5)(c) read with explanation mentioned therein. Therefore, ITC on GST paid on above said works contract service will not be available to the extent of capitalisation as mentioned in Explanation of Section 17(5) of the CGST Act, 2017.
In respect of question no. 3 the provisions of Section 17 (2) will be applicable in the present case in as much as when goods or services or both are used by the applicant partly for effecting taxable supplies under the GST Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies.