Experts divided over the interpretation
Large resident welfare associations (RWAs) may have to face GST liability retrospectively subject to certain conditions. One particular provision related to the amendment to the CGST law in the Finance Bill with effect from July 1, 2017 intends to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.

“It is also proposed to insert an explanation therein, to clarify that the person or its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one person to another,” the provision said.
Experts are divided over the impact of this new provision.

The existing rule says a RWA collecting more than ?7,500 as maintenance fee and who se annual turnover is more than ?20 lakhs, need to pay GST.

This provision is in line with the rulings given in yjr Apsara Co-operative Housing Society (2020) matter by Maharashtra’s AAAR (Appellate Authority for Advance Rulings) and in the matter of the Association of Inner Wheel Clubs of India by West Bengal’s AAAR which stated societies/clubs activities constitute supply and are liable to GST, and threfore the mutuality principle is inapplicable to them.