Case Details: Liberty Square Apartment Owners Association, In re [2026] 185 taxmann.com 477 (AAR-KARNATAKA)
Judiciary and Counsel Details
- Kalyanam Rajesh Rama Rao & Sivakumar S Itagi, Member
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Ms Deepa K Shetty, CA for the Applicant.
Facts of the Case
The applicant, being a Resident Welfare Association (RWA), filed an application before the Authority for Advance Ruling (AAR), seeking a determination on the GST implications and time of supply in respect of corpus/sinking fund collected from its members. It was engaged in managing and administering common areas of a residential complex and collecting monthly maintenance charges for recurring expenditure such as salaries of staff, upkeep of common areas, and utilities. It was further stated that, in addition to maintenance charges, the applicant collected corpus funds for future contingencies and long-term capital expenditure, which were separately accounted for and governed by the bylaws. It contended that the corpus fund was distinct from monthly maintenance charges and sought a ruling on whether such collections constituted ‘consideration’ and whether GST was payable at the time of collection or utilisation. The matter was accordingly placed before the Authority for Advance Ruling (AAR).
AAR Held
The AAR held that corpus fund collected by RWA constitutes ‘consideration’ for a future supply of services within the meaning of Section 2(31) read with Section 7 of the CGST Act and Karnataka GST Act, and is taxable under SAC 9995 in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-06-2017. It held that such corpus/sinking fund amounts are in the nature of advances and not deposits, as they are collected upfront for future supply of services by the association. The Authority further held that, in view of Section 13(2)(a) of the CGST Act and Karnataka GST Act, the time of supply is triggered at the time of receipt of such corpus fund, since it represents an advance towards future taxable supply. It also observed that corpus fund is distinct and independent from monthly maintenance charges, which relate to ongoing services, whereas corpus fund pertains to future capital requirements. Accordingly, it was held that GST is payable at the time of collection itself on corpus/sinking fund contributions.
List of Cases Referred to
- State of West Bengal v. Calcutta Club Ltd. [2019] 110 taxmann.com 47/29 GSTL545/ 76 GST 614 (SC) (para 8).
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