·       The Appellant filed the present appeal against the ruling of Karnataka Authority for Advance Ruling (‘AAR’) which held as under:

(i)     The Applicant is liable to pay CGST and SGST on the contribution received from its members as their activities amounts to taxable supply of service

(ii)    Benefit of exemption under entry No. 77 of Notification No 12/2017 CT(R) dt 28.06.2017 (as amended) (‘the Notification’) is available only if maintenance charges (contributions) do not exceed INR 7500/- per month per member. In case the charges exceed INR 7500/- per month per member, the entire amount is taxable

·       Aggrieved by the ruling of the AAR, the Applicant filed an appeal before the Karnataka Appellate Authority for Advance Ruling (‘AAAR’)

• Whether the activities of the Applicant are liable to tax under GST?
• If so, whether in terms of entry No.77 of the Notification, the contribution received by the association from its members are liable to tax only in excess of the amount of INR 7500 per month per member?

• ·       For an activity to qualify as supply, there must be supply of either ‘goods’ or ‘services’ or both and the activity should be undertaken for a consideration in the course or furtherance of business
• ·       Any transaction which gives the recipient a benefit can be considered as a ‘service’
• ·       In the present context, the activities performed by the Applicant for ensuring the maintenance and upkeep of the residential apartment complex by procuring the services and goods from third parties benefits every member of the association and hence, it can be said that there is a service rendered by the Applicant to its members
• ·       As per the definition of business under the CGST Act, the activity of providing facilities or benefits by an association to its members for a subscription qualifies as business under GST law. Therefore, the transactions between the association and its members is a service
• ·       The individual apartment owners who are members of the Applicant are the beneficiaries and the contributions made by them is to be considered as consideration for the service received
• ·       Therefore, there is a supply of service by the Applicant to its members and the same is taxable under GST
• ·       As per entry 77 of the Notification, the contribution upto an amount of INR 7500/- per month per member, received by the association from its members are exempted from GST
• ·       In the case of Commissioner of Customs (Import) Mumbai v. M/s Dilip Kumar 2018-VIL-23-SC-CU-CB, the Supreme Court has held that the benefit of ambiguity in exemption notification cannot be claimed by an assessee and must be interpreted in favour of revenue. Accordingly, the contribution by a member of an amount more than INR 7500/-, will not be eligible for exemption under entry No. 77 of the Notification and the entire amount of contribution will be liable to be taxed