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

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

Flat owner without legal title has consumer rights

In a significant judgment, the South Mumbai Consumer Forum has held that a flat owner legally occupying the flat would be a consumer, even if his title to the flat might be in dispute before a competent court. Thurlow owned a flat in a co-operative society. Appuswami was residing with him. In 1976, Appuswami got married in the same flat, and his wife started residing in the same flat. They had three children, born and brought up in the same flat. After Thurlow expired in 2004, Appuswami approached the High Court for inheritance to Thurlow's estate but expired while the matter was pending. His wife and children were brought on record. Subsequently, the society intervened, contending Appuswami did not have any right to the flat and it should be handed over to the Society. The Appuswami family continued to reside in the flat, and even pay the society's outgoings and maintenance charges. Later, the society stopped collecting maintenance charges from all members, as it earned...
Post a Comment
Read more

Court approached in the early stages of arbitration will prevail in all other subsequent proceedings

In National Highway Authority of India v. Hindustan Steelworks Construction Limited, the Hon'ble Delhi High Court opined that once the parties have approached a certain court for relief under Act at earlier stages of disputes then it is same court that, parties must return to for all other subsequent proceedings. Language of Section 42 of Act is categorical and brooks no exception. In fact, the language used has the effect of jurisdiction of all courts since it states that once an application has been made in Part I of the Act then ―that Court alone shall have jurisdiction over arbitral proceedings and all subsequent applications arising out of that agreement and arbitral proceedings shall be made in that Court and in no other Court. Court holds that NHAI in present case cannot take advantage of Section 14 of the Limitation Act, 1963 for explaining inordinate delay in filing present petition under Section 34 of this Act in this Court.
Post a Comment
Read more