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.
Local Circles are requested to take up this issue with Government immediately 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.
Local Circles are requested to take up this issue with Government immediately more
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View all 8 comments Below 8 comments
I have written an article on this: can be accessed on https://twitter.com/ashokbansal/status/1145286414948622341 more
Jan 07
Section 2(17)(e) was deliberately introduced by Bureaucrats in CGST Act as they are not affected by it as they stay in Bungalows. This was done to overcome the Supreme Court judgements to pronounce that housing societies are run on Concept of mutuality. more
Jan 08
I too have been asking for a PIL since a long time for this issue. Even 18% GST on Medical insurance is a crime, especially for senior citizens, who have to take a policy. I wrote to the PM about this but his office wrote back saying the PM was not involved and that I should take it up with My Gov. But I could not find the site anywhere which will allow me to post the grievience. more
Dec 19
Mr Mohit Pande Ji can you quote the said judgment of Bombay High Court here so that after going through the actual case and judgment we can express our views here. more
Dec 19
I am trying to get a copy of HC order which was delivered in June/July 2018 and share it on Local Circle. more
Dec 19
Correct statement that housig society has to be exempted from GST. The name itslef says the society formed for carrying out house hold works of ones house. Then there is no chance of business inside ones house, hence GST is not applicable. more
Dec 19
