RWA requires to pay GST on members’ monthly contribution exceeding Rs. 7500
Resident Welfare Associations –– GST on RWA Contributions –– The petitioners are Resident Welfare Associations (RWA) in apartment complexes, barring one individual, who is a resident in an apartment, challenged an order of the Authority for Advance Ruling (AAR) levying tax on the entirety of the contribution by him to a RWA and challenged Circular No.109/28/2019 dated 22.07.2019. The court observed that an exemption was granted to contributions made to RWA upto an amount of Rs. 7,500/- per month per member under Notification 12/2017CT dated 28.06.2017. The AAR, by impugned order dated 21.06.2019, held that the grant of exemption was conditional upon the contribution being an amount of Rs. 7,500/- or less. If the contribution exceeded the sum of Rs. 7,500/-, then the very entitlement of that RWA to exemption would stand defeated and the entirety of the amount collected would have to be brought to tax. The impugned Circular was passed toeing the line of the AAR. The court observed that the conclusion of the AAR as well as the Circular 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 in question. Further, clarified that it is only contributions to RWA in excess of Rs. 7,500/- that would be taxable under GST Act.
Held that:- The Hon’ble High Court quashed both AAR ruling and Circular and allowed the writ Petitions.
RWA requires to pay GST on members’ monthly contribution exceeding Rs. 7500
Resident Welfare Associations –– GST on RWA Contributions –– The petitioners are Resident Welfare Associations (RWA) in apartment complexes, barring one individual, who is a resident in an apartment, challenged an order of the Authority for Advance Ruling (AAR) levying tax on the entirety of the contribution by him to a RWA and challenged Circular No.109/28/2019 dated 22.07.2019. The court observed that an exemption was granted to contributions made to RWA upto an amount of Rs. 7,500/- per month per member under Notification 12/2017CT dated 28.06.2017. The AAR, by impugned order dated 21.06.2019, held that the grant of exemption was conditional upon the contribution being an amount of Rs. 7,500/- or less. If the contribution exceeded the sum of Rs. 7,500/-, then the very entitlement of that RWA to exemption would stand defeated and the entirety of the amount collected would have to be brought to tax. The impugned Circular was passed toeing the line of the AAR. The court observed that the conclusion of the AAR as well as the Circular 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 in question. Further, clarified that it is only contributions to RWA in excess of Rs. 7,500/- that would be taxable under GST Act.
Held that:- The Hon’ble High Court quashed both AAR ruling and Circular and allowed the writ Petitions.