Only contributions to RWA in excess of Rs. 7,500 would be taxable under GST Act: Madras HC
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- Last Updated on 20 July, 2021
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Case details: Greenwood Owners Association v. Union of India - [2021] 128 taxmann.com 182 (Delhi)
Judiciary and Counsel Details
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- Dr. Anita Sumanth, J.
- Ms. R. Vaishali and G. Nataarajan for the Petitioner.
- Mrs. Hema Muralikrishnan, Sr. Standing Counsel and C. Kulandaivelu, Sr. Panel Counsel for the Respondent.
Facts of the Case
The petitioner was Resident Welfare Associations (RWA) in apartment complexes. It challenged an order of Authority for Advance Ruling (AAR) levying tax on entirety of contribution to a RWA. As per Notification No. 12/2017-CT dated 28-6-2017, an exemption was granted to contributions made to RWA upto an amount of Rs. 7,500/- per month per member. It submitted that where the contribution exceeded the amount of Rs. 7,500/-, then the exemption to be available upto to a sum of Rs. 7,500/- and only the difference (excess) become exigible to tax. However, the AAR held that where the contribution exceeded the amount of Rs. 7,500/-, it would lose the entitlement to exemption altogether on ground that grant of exemption was conditional upon contribution being an amount of Rs. 7,500 or less and if contribution exceeded sum of Rs. 7,500, then no exemption would be there.
High Court Held
The Honorable High Court observed that in the early years of GST, the Goods and Services Tax Department issued a clarification in the case of Co-operative Housing Societies, wherein they categorically stated that GST would be applicable only on the amount in excess of Rs. 7,500/-. The fliers cover all Co-operative Housing Societies, in essence, RWAs, Housing Societies or Societies in residential complexes. Moreover, the conclusion of the AAR to the effect that any contribution above Rs. 7,500/- would disentitle the RWA to exemption, is contrary to the express language of the Entry of exemption notification and therefore liable to be set aside. Therefore, it is only contributions to RWA in excess of Rs. 7,500/- that would be taxable under GST Act.
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4 thoughts on “Only contributions to RWA in excess of Rs. 7,500 would be taxable under GST Act: Madras HC”
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Dear sir,
Applicability of GST on difference of Exceeding 7500/- is it to all the states or only to particular state ?
“The decision by any High Court will have the force of a binding precedent only in the State on which the Court has jurisdiction. It can have a persuasive effect on the another territories. [CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727 (Bombay)]
In the given case, the decision would have a binding effect in the jurisdiction of Madras High Court only and not on the other States.”
What will happen to RWA start to follow the judgement?
If one day SC overturned this judgment will it affect the state RWH
“If in future the Hon’ble Supreme Court concludes otherwise, tax along with interest would be required to be paid.
One may explore the option of paying tax under protest. In this case, if in future the Hon’ble Supreme Court passes the same judgement as held by Single Bench of Madras High Court, the registered person can apply for refund (this is subject principal of unjust enrichment and other conditions relating to refund under GST).
P.S: It may be noted that the given case has been challenged by the Government before the Division Bench of Hon’ble Madras High Court.”