GST on Resident Welfare Associations And Cooperative Housing Societies
The Honorable Kerala High Court in its final order has struck down the provisions of Section 7(1)(aa) of the CGST Act 2017 as unconstitutional, holding that: In terms of the principle of mutuality, an entity cannot make a supply to itself. Since members collectively constitute the association, transactions between them lack the essential element of duality required for a taxable supply and upheld the “Doctrine of Mutuality”.
Further, Article 366(12A) of the Constitution defines GST as a tax on the “supply” of goods or services from one person to another. The court emphasized that for a valid taxable transaction, there must be two distinct parties—a supplier and a recipient.
The retrospective amendment was deemed as an attempt to artificially create a taxable event where none existed, probably exceeding the legislative competence accorded under the Constitution.
No service can be rendered by an association to its own members as they are part of the same entity, echoing the established principle that “one cannot make a profit from oneself.” The doctrine of mutuality is a well-established legal principle that has been consistently upheld by the Supreme Court of India in several landmark judgments
“The basic concept is that a person cannot trade with himself… The contributors to the common fund and the participators in the surplus must be identical.”
The concept of Mutuality applies to Cooperative housing Societies also, therefore 18% GST on Members monthly contribution to common fund is Unconstitutional.
We request Local Circes to request Government to revoke 18% GST on Members of Cooperative Housing Societies. more
Further, Article 366(12A) of the Constitution defines GST as a tax on the “supply” of goods or services from one person to another. The court emphasized that for a valid taxable transaction, there must be two distinct parties—a supplier and a recipient.
The retrospective amendment was deemed as an attempt to artificially create a taxable event where none existed, probably exceeding the legislative competence accorded under the Constitution.
No service can be rendered by an association to its own members as they are part of the same entity, echoing the established principle that “one cannot make a profit from oneself.” The doctrine of mutuality is a well-established legal principle that has been consistently upheld by the Supreme Court of India in several landmark judgments
“The basic concept is that a person cannot trade with himself… The contributors to the common fund and the participators in the surplus must be identical.”
The concept of Mutuality applies to Cooperative housing Societies also, therefore 18% GST on Members monthly contribution to common fund is Unconstitutional.
We request Local Circes to request Government to revoke 18% GST on Members of Cooperative Housing Societies. more
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