"For any transaction to be
taxable under GST, there needs to be a quid pro quo
between the exchange of consideration (money) and the
supply of service. The ruling has been pronounced on the
basis of the conjecture that there is a linkage between
voluntary or gratuitous payments made by outgoing
members and the past services, "said Harpreet Singh,
partner, KPMG India.
Many members tend to donate money to the housing society when they sell the
house. The AAR ruled that this was nothing but a payment against "services" the
society has been providing all these years that may have had notional value and
hence it should be taxable.
AAR said that the money received by the society was for the supply of services.
GST has a concept called "supply of services," which is used to figure out if a
transaction is taxable or not.
The AAR cited parts of the Model Bye Laws that say the
society can't accept a payment from a transferor or
transferee that was made on their own.
Such transactions are similar to service charges
collected by a restaurant on which GST is applicable.
The AAR said that the customer would not be able to
refuse to pay the service charges if she is not happy
with the services of the restaurant.
Though the collection of charges by the society might be
illegal under some other law, since it is covered by the
scope of supply and other ingredients of the GST levy,
it is taxable, the AAR said.