The Maharashtra Authority of Advance Ruling (AAR) ruled that the Society claiming GST Exemption of Rs.7500 cannot avail Input Tax Credit (ITC) on input services.
Facts of the case:-
The applicant society, Vishal Cooperative Housing Society Limited does not charge contribution towards maintenance more than INR 7.500 per member per month (previous limit of INR 5,000 till 25th January 2018) to any commercial shop or residential unit or Garage. In case of residential flat, the society does not charge GST on amount collected towards government dues (such as property tax, education fund, etc.), claims exemption towards reimbursement (such as maintenance charges, central service charges, etc.) and charges GST on flat specific contributions (such as repair and maintenance fund, contribution towards sinking fund, interest on arrears, parking charges, etc.). In the case of commercial shops and garages, society does not charge GST on the amount collected towards government dues (such as properly lax, education fund, etc.).
Interpretation of law:-
Society charges GST on reimbursements as well as flat specific contributions without claiming exemption of INR 7,500 per member per month as this expectation is applicable to residential units only. Further, society also collects GST contributions toward major repair funds. The Society does not claim input tax credit on regular expenses such as professional fees, bank charges, insurance premium, stationery items purchased, repair and maintenance, security charges, etc. The society has claimed proportionate ITC once only pertaining to GST charges on major repair bills received from the contractor.
The applicant has sought the advance ruling on the issue according to circular number 109/28/2019. GST dated 22 July 2019 RWAs are entitled to take ITC on GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services. The society claims exemption of INR 7,500 available to residential units and hence, it does not claim ITC on various services availed such as professional fees, bank charges, insurance premium, stationery items purchased, repair and maintenance, security charges, Cable Services etc. whether the society can claim ITC on these services either fully or proportionately despite the availing exemption available to residential units.
The coram of Rajiv Magoo and T.R. Ramnani ruled that the provisions of Section 17 (2) will be applicable in the present case in as much as when goods or services or both are used by the applicant partly for effecting taxable supplies under the GST Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies.