2021-TIOL-1505-HC-MAD-GST

Greenwood Owners Association Vs UoI

GST - Applicant had sought a ruling from the Advance Ruling Authority as to whether they are liable to pay GST only on the amount in excess of Rs.7500/- collected as monthly maintenance charges from the members of the Association (RWAs) or on the entire amount in the context of Sl. no. 77(c) of 12/2017-CTR - AAR held that in the event the charges or share of contribution goes above Rs.7500/- per month, such service will not fit the description appearing in Sl. no. 77(c) of 12/2017-CTR and hence such service will not be exempt; that there is no option to the taxpayer to pick and choose from the description of services mentioned in column (3) of notification to make any service partly applicable to the notification and partly chargeable; that any service either falls within the scope of description in column (3) or it does not; that in the instant case since the share of contribution by members is above Rs.7500/- per month, the exemption is not available and GST at appropriate rates are to be charged on the full amount of reimbursement of charges or share of contribution - Aggrieved, a Writ Petition was filed before the Madras High Court - Bench noted that the term "upto" employed in the notification is heavily relied upon by the petitioner to contend that only the exceeded amount is liable for the tax and not the whole amount collected; that the CBIC e-flyer explaining that GST would be applicable only on the amount in excess of Rs.5000/- (as the exemption then stood till 24.01.2018) is relied upon - Noting that the issue raised needs detailed consideration of the High Court, the Respondents were directed to file counter and the matter was posted, and until further orders, the petitioner was permitted to pay GST only towards the exceeded amount over and above the sum of Rs.7500/- - Petitioners in WP nos. 5518 and 1555 of 2020 and 30004 of 2019 challenge Circular no. 109/28/2019-GST dated 22.07.2019 wherein it was clarified that in case the maintenance charges exceeded Rs.7500/- per month per member, the GST is payable on the entire amount and is not limited to the excess amount only - Matter heard.

Held:

+ There is no ambiguity in the language of the exemption provision in this case and, therefore, the judgment of the Supreme Court in the case of Dilip Kumar [ 2018-TIOL-302-SC-CUS-CB ] would not be applicable to the facts and circumstances of the case. [para 16]

+ The intention of the notification appears clear, that is, to grant exemption in regard to the receipts from services that answer to the description set out therein. The description of the services is also clear, that is, services to the members of an unincorporated body or a non-profit entity by way of reimbursement of charges or share of contribution up to an amount of Rs.7500/- per month per member for the sourcing of goods or services from a third person for the common use of its members. No ambiguity presents itself on a plain reading of the Entry and the intention is clear, so as to remove from the purview of taxation contribution upto an amount of Rs.7500/-. [para 17]

+ In a case where legislature intended that the exemption shall apply only to cases where the amount charged does not exceed a specified pecuniary limit, it states as such, as can be seen from the language deployed in the proviso to clause 56 in notification 25 of 2012-ST where it is stated “the exemption shall apply only where the gross amount charged for such service does not exceed Rs.5000/- in a financial year'. [para 19]

+ In notification 12/2017-CTR , Entry 78, here too, the categorization of ‘artist' is on the basis of the earning of the artist, one who charges less than Rs.1.50 lakhs and one who charges more. The intention is clear, to exempt only such consideration, which is below Rs.1.50 lakhs. If the consideration exceeds Rs.1.50 lakhs by even a rupee, the artist would stand elevated to the next slab, losing the benefit of exemption. [para 21]

+ It is relevant to note that entries 77 and 78 are from the same Notification thus the choice of words employed is a conscious one intended to have different applications. [para 22]

+ The plain words employed in Entry 77 being, ‘upto' an amount of Rs.7500/-can thus only be interpreted to state that any contribution in excess of the same would be liable to tax. [para 23]

+ The term ‘upto' hardly needs to be defined and connotes an upper limit. It is interchangeable with the term ‘till' and means that any amount till the ceiling of Rs.7500/- would be exempt for the purposes of GST. [para 24]

+ The intendment of the exemption Entry in question is simply to exempt contributions till a certain specified limit. The clarification by the GST department even as early as in 2017 has taken the correct view. [para 25]

+ The conclusion of the AAR as well as the Circular [ 109/28/2019-GST dated 22.07.2019] to the effect that any contribution above Rs.7500/- would disentitle the RWA to exemption, is contrary to the express language of the Entry in question and both stand quashed. [para 26]

+ It is only contribution to RWA in excess of Rs.7500/- that would be taxable under GST Act. [para 26]

- Petitions allowed: MADRAS HIGH COURT

2021-TIOL-157-AAR-GST

Shiv Sankara Health Care Enterprises

GST - Applicant has sought a ruling as to whether the goodwill paid to the partners at the time of retirement is liable to be taxed under GST Act.

Held: The issue on the applicability of GST on the 'Goodwill' extended by the applicant to the retiring partners can be arrived at only after analysing the details as to how the goodwill was arrived at and the related accounts which have not been furnished by the applicant - The applicant for the reasons that their consultants are not available has requested for withdrawal of the application - In this scenario, AAR finds that the withdrawal is to be permitted as the issue cannot be decided based on the submissions made by the applicant - Withdrawal of application is permitted without offering any observation/comment on the admissibility of the application and the applicability of the GST on the 'Goodwill': AAR

- Application withdrawn: AAR

2021-TIOL-156-AAR-GST

PSK Engineering Construction And Company

GST - Rate of GST to be charged on the services provided by the applicant to TANGEDCO for carrying out retrofitting work for strengthening the NPKRR Maaligai against seismic and wind effect and modification of elevation in TNEB headquarters building at Chennai [SAC for the Construction Service is SAC 9954] is 18% as per SL.No.3(xii) of Notification 11/2017-CT(Rate) - TANGEDCO has been established on commercial principles inasmuch as Section 61 of the Electricity Act, 2003 stipulates the guiding principles for determination of tariff by the Tamil Nadu Electricity Regulatory Commission and mandates that the Tariff should progressively reflect cost of supply of electricity, reduce cross subsidy and recover the cost of electricity in a reasonable manner - Hence, the supply of works contract services as per the applicant's contract cannot be considered as that meant predominantly for use other than for commerce, industry, or any other business or professional purposes - service is, therefore, not covered under entry 3(vi) of notification 11/2017-CTR so as to attract GST @12%: AAR

- Application disposed of: AAR