Shabad Sharan Goyal S/O Shri Nirmal Kumar Goyal vs. Union Of INDIA
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The petitioner, Shabad Sharan Goyal, challenged the demand of Goods and Services Tax (GST) on monthly maintenance charges. The petitioner argued that the maintenance charges paid were less than Rs. 7,500/- per month, which should be exempt from GST. Respondent No. 3, Pass Sikar Logistic LLP, a facility management company appointed by Respondent No. 2, Ayaan Buildtech Pvt. Ltd., had raised a demand for CGST and RGST at 9% each (total 18%). The petitioner had issued a legal notice to Respondents 2 and 3, which remained unanswered. The petitioner contended that since the maintenance charges were below the exemption threshold, Respondent No. 3 was not liable to deduct GST.
Held
The Court held that the petitioner is not entitled to the GST exemption on monthly maintenance charges. The exemption clause, as clarified by the Circular dated 22.07.2019, is specifically for Residential Welfare Associations that are unincorporated bodies or non-profit entities providing services to their members. The Court found no ambiguity in this exemption clause. The reasoning was that Respondent No. 3, Pass Sikar Logistic LLP, is a Limited Liability Partnership with its own GST registration, indicating it is not a non-profit entity. Additionally, the petitioner is not a member of any Residential Welfare Association or Respondent No. 3. Therefore, the petitioner does not fall within the scope of the exemption. The Court, referencing the principle that ambiguity in exemption clauses favors the Revenue, dismissed the writ petition. The operative direction was the dismissal of the writ petition at the admission stage.
Key Issues
1. Whether the petitioner is entitled to an exemption from GST on monthly maintenance charges under the relevant exemption clause, considering the amount paid is less than Rs. 7,500/- per month? 2. Whether Respondent No. 3, Pass Sikar Logistic LLP, qualifies as an entity eligible for the GST exemption on maintenance charges? Petitioner's arguments: The petitioner contended that the maintenance charges paid were below the Rs. 7,500/- threshold, making them exempt from GST. They also argued that Respondent No. 3, as a facility management company collecting these charges, should not have levied GST. The petitioner relied on the principle that if maintenance charges are below the specified limit, no GST is payable. Revenue's arguments: Respondent No. 1 (Union of India) argued that the exemption provided by Circular dated 22.07.2019 is specifically for Residential Welfare Associations (unincorporated bodies or non-profit entities) providing services to their members. They contended that Respondent No. 3 is a Limited Liability Partnership with its own GST number, thus not a non-profit entity. Furthermore, the petitioner is not a member of Respondent No. 3, disentitling them from the exemption. The Revenue relied on the Supreme Court's decision in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company & Ors. (2018) 9 SCC 1, stating that ambiguity in exemption clauses favors the Revenue.
Sections Cited
Section 73, Section 129, Rule 86A
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Cause title — parties, addresses and appearances
Order 14/03/2024 REPORTABLE
Petitioner has preferred this writ petition inter-alia challenging the demand of Goods & Services Tax on monthly maintenance charge.
It is contended by learned counsel for the petitioner that there is an exemption for the flat owners who are residing in flats with regard to payment of maintenance, repair and service, if the same is less than Rs.7,500/-. It is also contended that petitioner has been paying maintenance charges at the rate which is less than Rs.7,500/-. However, respondent No.3 has raised a demand of tax of Central Goods & Services Tax (hereinafter referred as ‘CGST’) and Rajasthan Goods & Services Tax (hereinafter referred as ‘RGST’) @ 9% each i.e. a total of 18%. It is contended that a legal notice was also given to respondent No.2 & 3, for which no reply has been given by them.
It is argued that respondent No.3 is registered as Limited Liability Partnership firm and is a facility management company for maintenance appointed by respondent No.2 to collect the maintenance charge from the respective owners/buyers of flats. It is contended that since the amount paid by the petitioner as maintenance charge is less than Rs.7,500/-, no CGST or RGST was liable to be deducted by respondent No.3. 4. Mr. Sandeep Pathak, learned counsel appearing for respondent No.1 contends that in terms of Circular dated
[2024:RJ-JP:12929-DB] (3 of 4) [CW-7669/2023] 22.07.2019, the exemption from GST has been provided to the Residential Welfare Association (unincorporated body or a non- profit entity) registered under any law for the time being in force which provide services to their members for maintenance. It is also provided that if subscription contribution charged from its members is up to an amount of Rs.7,500/- per month per member for supporting of goods and services from a third person and for the common use of its members in housing society or the residential complex, then no GST is payable. It is contended that the conditions as prescribed for the exemption are not fulfilled as the service is not provided by an unincorporated body or a non- profit entity. In this regard, our attention is drawn to the tax invoice of maintenance charges-Annexure-5 and it is contended that respondent No.3-Pass Sikar Logistic LLP has its own GST number, hence, it is not a non-profit entity. It is also contended Company & Ors.: (2018) 9 SCC 1, in which the Apex Court observed that if there is any ambiguity in a taxing statute, the benefit shall be construed in the favour of the assessee, but if there is any ambiguity in the Exemption Clause, the benefit has to go in favour of the Revenue/State.
We have considered the contention and have perused the matter.
Admittedly, petitioner is claiming benefit under the Exemption Clause. GST exemption has been provided to the
[2024:RJ-JP:12929-DB] (4 of 4) [CW-7669/2023] Residential Welfare Association which provides services to its members. We are of the considered view that there is no ambiguity in the Exemption Clause, as the Exemption Clause clearly stipulates the persons who are entitled to exemptions under this Clause. Petitioner is neither member of any Resident Welfare Association nor of respondent No.3-Pass Sikar Logistic LLP. Since petitioner is not falling under the Exemption Clause provided under the GST exemptions and since demand of GST has been raised from respondents, we are not inclined to entertain the present Civil writ petition and the same is accordingly dismissed at the stage of admission. (SHUBHA MEHTA),J (PANKAJ BHANDARI),J LAKSHYA SHARMA /3
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.