Only contributions to RWA in excess of Rs. 7,500 would be taxable under GST Act: Madras HC
- Blog|News|GST & Customs|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 20 July, 2021
Latest from Taxmann
Case details: Greenwood Owners Association v. Union of India - [2021] 128 taxmann.com 182 (Delhi)
Judiciary and Counsel Details
-
- 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.
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
4 thoughts on “Only contributions to RWA in excess of Rs. 7,500 would be taxable under GST Act: Madras HC”
Leave a Reply
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
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.”