Maharashtra: Housing societies can conduct elections on their own, but govt tightens noose around violators:

By Indian Express:

A society’s managing committee will invite a fine of Rs 25,000 if it failed to submit audit accounts and other mandatory documents.

While housing societies in Maharashtra having less than 200 members will now be able to hold their elections in the annual general meeting every five years, the state government on Tuesday adopted provisions enhancing the accountability of managing committee members.

Under the new provisions adopted by the Cabinet on Tuesday, the society’s managing committee will invite a fine of Rs 25,000 if it failed to submit the audit accounts and other mandatory documents to the state cooperatives department within the set deadline. The government has also made failure to submit self-declaration documents of managing committee members an offence.

Further, the Cabinet adopted a proposal for issuance of an ordinance for incorporating a separate chapter governing housing societies in the Maharashtra Cooperative Societies (MCS) Act, 1960. While the government had initially planned to table a legislation to this effect during the Monsoon Session of the state Assembly, sources said that it was decided to adopt the ordinance route since this could not be done due to want of time.

Following an amendment moved in 2013 by then Congress-NCP government, elections for all cooperatives in the state were brought under the control of the Maharashtra State Cooperative Election Authority, making the procedure tedious and expensive.

Contending that housing societies functioned as non-profit units unlike other cooperatives, the government has now diluted the provisions for them.

Accordingly, housing societies with less than 200 members will no longer need to approach the Authority to conduct elections. Out of the two lakh-odd cooperatives in Maharashtra, one lakh are housing societies. According to officials, about 80 per cent of the housing societies have fewer than 200 members.

The government’s new law also makes it clear that “every society member will be entitled to inspect free-of-cost all records, books of accounts, and correspondences of the society”. Sources said that this was being done in the wake of the numerous complaints.

In the case of a defaulting member, the society has been given the power to have a charge on the share and interest of a member or even a past member to the extent of the dues payable by him or her.

The government has also allowed the management committee to admit the person nominated by a deceased member as a “provisional” member till all the legal documents of succession are in place.

While the reservation of seats for backward classes and women on the management committee was a contentious issue, the government has retained the provision. However, there could be a slight increase in maintenance charges for members with the government making it mandatory for housing societies to contribute annually towards training and education of members through the local state housing federation.

Disclaimer: The content has been sourced from a third party, therefore, we are not liable for the relevance and accuracy of the content.

GST on Co-operative Housing Societies:

Co-operative Housing Societies are entities registered under the co-operative laws of the respective States.

According to Section 2(16) of the Maharashtra Co-operative Society Act, 1960, “housing society” means a society, the object of which is to provide its members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling houses or flats are already acquired, to provide its members common amenities and services.

Simply put these are a collective body of persons, who stay in a residential society. As a collective body, they would be supplying certain services to its members, be it collecting statutory dues from its members and remitting to statutory authorities, maintenance of the building, security etc.

Co-operative Housing Societies – whether amenable to levy of GST:

Society is akin to a club, which is composed of its members. So, can a service provided by a Housing Society to its members be treated as service provided by one person to another. The answer is yes. The following extracts of the GST law will make the position clear.

As per Section 9 of CGST Act, 2017, levy of GST is on the supply of goods and services. As per Section 7 expression “supply” includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.

The definition of “person” in Section 2(84) (i) of the CGST Act, 2017 specifically includes a co-operative society registered under any law relating to co-operative societies. Thus a registered co-operative society is a person within the meaning of the term in the CGST Act.

The next question which arises is whether the activity of the society can be said to be in the course or furtherance of business.

The definition of business as per section 2(17) of the CGST Act, 2017 is as under

“Business” includes-

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit.

(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a).

(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction.

(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of the business.

(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members.

(f) admission, for a consideration, of persons to any premises.

(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation.

(h) services provided by a race club by way of totalisator or a license to the bookmaker in such club. and

(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.

Thus, as per section 2(17)(e) of the CGST Act, 2017provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members is deemed to be a business. The activities of the housing society would thus attract the levy of GST and the housing society would be required to register and comply with the GST Law.

Compliance requirements for housing societies under GST:

If the turnover of housing society is above 20 lakhs, it needs to take registration under GST in terms of Section 22 of the CGST Act, 2017. However, taking registration does not mean that the housing society has to compulsorily charge GST in the monthly maintenance bills raised on its members. Notification No.12/2017 -Central Tax (Rate) dated 28.06.2017 at sr.no.77 provides for the following exemption to housing societies:

Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution-

(a) as a trade union;

(b) for the provision of carrying out any activity which is exempt from the levy of Goods and service Tax; or

(c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex

In view of the provision contained at (c) above, a society may be registered under GST, however if the monthly contribution received from members is less than Rs.5, 000/-(and the amount is for the purpose of sourcing of goods and services from a third person for the common use of its members), no GST is to be charged by the housing society on the monthly bill raised by the society. However, GST would be applicable if the monthly contribution exceeds Rs. 5, 000/-.

Certain statutory dues such as property tax, electricity charges etc. form part of the monthly maintenance bill raised by the society on its members. The question would arise whether such charges should be included while computing the monthly limit of Rs.5000/- in terms of clause (c) of sr.no.77 of notification 12/2017 -Central Tax (Rate) dated 28.06.2017. As per clause (b) of the above exemption, the exemption is available to housing societies for the provision of carrying out any activity which is exempt from the levy of Goods and Services Tax assuming that a housing society is a non-profit registered entity; and property tax and electricity is exempt from the levy of GST. Thus, charges, collected by the society on account of property tax, electricity charges, and other statutory levies would be excluded while calculating the limit of Rs.5,000/-.

Disclaimer: The content has been sourced from a third party, therefore, we are not liable for the relevance and accuracy of the content. The article referred from Taxguru.