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Service tax by an aop formed to run a housing society

23 December 2015

We are a Housing Society based in Pune having a Total 335 members & our Society is presently not Registered. Hence we have formed an Association of Persons with the primary intention of Collecting Maintenance Charges from all Members & running the day to day Maintenance of our Society ie Providing Security, Housekeeping, Running of the STP and WTP Plants, Paying of Common Electricity Bills, Swimming Pool etc. Our query :- Is Service Tax Applicable to our Society which is presently being run by the Association of Persons ie Do we have to Charge Service Tax @ 14.5% (present rate) to the Members & pay the same to the Treasury.

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Ravi Kumar Somani (Indirect Taxes Specialization) (3893 Points)
Replied 23 December 2015

Yes, Service Tax is applicable. However, there is a Jharkhand high court judgment in favour which says that no ST is liable on such transaction as AOP and its members are one and the same and does not constitute two different persons. Many are not paying and litigating based on the favourable judgments other are collecting and paying to avoid any litigation Accordingly you can take a decision.