Skip to main content

Mumbai housing societies spared service tax

Housing societies do not have to pay service tax on maintenance charges collected from their members, a tax tribunal has ruled.

This will reduce the maintenance outgo of residents of nearly a lakh housing societies in Mumbai and Thane, particularly the upscale ones where the charges can go over Rs 1 lakh every month.

The recent decision by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) came in a case involving Tahnee Heights, a residential housing society on Nepean Sea Road, and Mittal Tower at Nariman Point that houses several offices.

The decision means a flat-owner or owner of a commercial premise in a housing society registered under the Maharashtra Co-operative Societies Act will have to pay much less. The society will not be required to impose a service tax charge (currently 12.36%) against maintenance charges collected from its members.

Typically in any housing society in Mumbai, the resident welfare association (RWA) formed from among members of the society caters to the administrative needs of the society. Maintenance charges are collected for purposes like water charges, electricity for common areas (lifts, stairways, lobbies), security, lift maintenance or repairs, and maintenance of common areas. Most of these charges that are collected are in the nature of reimbursement.

In some cases, the RWA enters into contracts with external service providers, say for regular lift maintenance or for providing service guards. These agencies charge service tax on their fees, which is paid by the RWA.

However, service tax authorities insisted housing societies pay up on the charges collected from its members. In tony areas or in luxury housing societies with a club house, gym or swimming pool, monthly maintenance charges can be steep, even running to more than Rs 1 lakh per flat. The service tax authorities contended the RWAs are providing taxable "club or association services".

In the case, Tahnee Heights, which collected charges for maintenance, repairs and beautification, and Mittal Tower that raised expenses from its members towards water and security charges and repairs, paid service tax on the department's "persuasion". Later they filed refund claims, which were rejected. Consequently appeals were filed with the CESTAT.

 Article referred: http://timesofindia.indiatimes.com/city/mumbai/Mumbai-housing-societies-spared-service-tax/articleshow/45876822.cms

Comments

Post a Comment

Most viewed this month

Valuation Report of Jewellery once made is effective for Four Assessment Years

The division Bench of the Delhi High Court in Pr.Commissioner of Wealth Tax vs. Raghu Hari Dalmia held that a valuation report made by a registered valuer once adopted shall be in effect for four assessment years unless an event has occurred whereby the value is increased or decreased. The High Court made it clear that the event of “search” under Section 132 of the Income Tax Act, 1961 cannot compel the assessee to undertake a fresh valuation.
2 comments
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Mere Agreement To Sell The Leased Property To Tenant Would Not Terminate Landlord-Tenant Relationship

In CIVIL APPEAL Nos. 1237­1238 OF 2019, Dr. H.K. Sharma vs Shri Ram Lal, the tenant had objected against the eviction suit filed by the landlord, claiming that the landlord-tenant relationship between them had ceased to exist by virtue of an agreement for sale entered between them and that he has already paid some money in advance based on the agreement. The tenant contented as the landlord-tenant relationship did not exist, the landlord cannot evict him. The matter went through various forums and finally landed before the Supreme Court in appeal. The Supreme Court referring to the judgment in Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage & Ors., held that in the instant case the lease agreement included no clauses on the fate of the tenancy. A fortiori, the parties did not intend to surrender the tenancy rights despite entering into an agreement of sale of the tenanted property. In other words, if the parties really intended to surrender their tenancy ...
2 comments
Read more