GST on Cooperative Housing Societies is Unconstitutional
A housing society is not an industry, the Bombay high court has ruled. Justice Suresh Gupte, in an order, quashed a labour court's order asking a housing society in Mumbai to reinstate a watchman whose services were terminated.
Since a housing society is not an industry as ruled by Bombay High Court the levy of 18% GST on members who are required to contribute 7500 or more per month towards common expenses is wrong.
Therefore Section 2(17) of the CGST Act:
“business includes– (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to members” is unconstitutional.
Article 14 of constitution guarantees Right to Equality. The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
Let us now examine how Section 2(17)(e) of CGST Act 2017 does not provide equality before law:
1. Members staying in same housing society are discriminated on the basis of monthly contribution towards common expenses.
2. Members of housing societies whose annual turnover is 20 Lakhs or less are fully exempted from 18% GST even if their monthly contribution is more than 7500 per month towards common expenses.
3. Rich persons staying in stand alone multi storied buildings are also fully exempted from 18% GST on the expenses incurred on maintenance, security, housekeeping etc. even when such expenses are more than 7500 per month.
4. Rich persons staying in lavish Bungalows are also exempted from 18% GST.
5. Bombay High Court order of June 2018 has clearly said that housing society is not an industry.
6. Supreme Court has ruled in a number of cases that Housing Societies are run on concept of Mutuality by members themselves on voluntary basis.
7. Cooperative Housing Societies were exempted from Service Tax. Service tax in now included in GST therefore housing societies should be totally exempted from GST. more
Since a housing society is not an industry as ruled by Bombay High Court the levy of 18% GST on members who are required to contribute 7500 or more per month towards common expenses is wrong.
Therefore Section 2(17) of the CGST Act:
“business includes– (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to members” is unconstitutional.
Article 14 of constitution guarantees Right to Equality. The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
Let us now examine how Section 2(17)(e) of CGST Act 2017 does not provide equality before law:
1. Members staying in same housing society are discriminated on the basis of monthly contribution towards common expenses.
2. Members of housing societies whose annual turnover is 20 Lakhs or less are fully exempted from 18% GST even if their monthly contribution is more than 7500 per month towards common expenses.
3. Rich persons staying in stand alone multi storied buildings are also fully exempted from 18% GST on the expenses incurred on maintenance, security, housekeeping etc. even when such expenses are more than 7500 per month.
4. Rich persons staying in lavish Bungalows are also exempted from 18% GST.
5. Bombay High Court order of June 2018 has clearly said that housing society is not an industry.
6. Supreme Court has ruled in a number of cases that Housing Societies are run on concept of Mutuality by members themselves on voluntary basis.
7. Cooperative Housing Societies were exempted from Service Tax. Service tax in now included in GST therefore housing societies should be totally exempted from GST. more
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View all 7 comments Below 7 comments
Also are u allowed to open 2 separate savings account in the same name in the same bank, one for personal and other for business? more
Feb 01
Mahesh sir If I open a NRE and NRO account is the government insurance protection is 5 lakhs for each or a total 5 lakhs for both accounts.NRE plus NRO Thank you more
Feb 01
It is interesting to note that if a society is paying 18% GST, even though it is not expected to pay, govt. just accepts and keeps that money, rather than guiding such entities to do right thing. In our society even though individual members pay around Rs. 4000/- pm, GST is paid from common society funds. This is under advice of a small time auditor, which may be found every where. Managing committee does not care to see the facts. What is way out? more
Jan 23
If annual maintenance of society is above 20 Lacs, you have to pay GST, though per member subscription is Rs. 4000 more
Jan 25
Please recheck your point no. 7 .Even service tax was levied on housing societies above Rs. 5000 per member. The govt. says it is on service provided by management committee to members . Further, Why not form small societies , so that total collection does not exceed Rs. 20 lacs pa. more
Jan 18
Why to worry? The Government is authorised by the people to carry out any thing illogical that may look like unconstitutional but the Government can change the constitution to suit itself. This is what we have been calmly accepting for the last 70 years. more
Jan 18
