GST on Societies:
There is no basis to levy any GST on Co-operative Housing Societies or their members living in Flats / Apartments.
Societies are run on Concept of Mutuality. Hon’ble Supreme Court has upheld that no tax could be levied on organizations running on the mutual Benefit basis.
I. CHS works on non-profit, no‐loss co‐operative model. Here services are received by members from the elected members of the society. People don’t have any alternative but to live in a CHS. When CHS is formed by members, they do it out of necessity; and NOT for entertainment or for profit. Housing is a basic necessity of people.
Society collections are only receiving reimbursement of actual expenses from the people who are supposed to bear them.
Slapping 18% GST on member contributions is simply a bad idea emanating from a bureaucratic machinery having no experience of CHS movement.
II. CHS has a minimal administrative structure. Its Managing Committee members work as volunteers without any salary or compensation, while engaging in full-time Job or Business.
Most of CHS are unable to get qualified staff on salary. Although recent amendment of 2013 provides for training so far hardly anything exists in reality.
CHS of any size is just not equipped to handle calculation of GST on member collections, calculation of GST on Services rendered to them by an unregistered service provider under Reverse Charge Mechanism and filing of 37 GST returns.
III. Service Tax sought to be levied on CHS was set aside by a tribunal in a February 2015 order.
In a landmark decision in the case of Matunga Gymkhana, Tahnee Heights CHS Ltd (reported in STO 2014 CESTAT 792) the Mumbai Tribunal has held that Services to members of club/co‐operative housing society is not a service by one to another and therefore it is not chargeable to service tax.
In view of the above, GST should be scrapped on co-operative societies.