Deposits which are not refunded but adjusted against the new member of society are Non-refundable deposits, hence, will be taxable under GST.

Last updated: 20 January 2021

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The Gujarat Authority for Advance Ruling has determined that non-refundable deposits collected by a co-operative service society, which are then adjusted against new members, are considered taxable supplies under GST. These deposits are not merely security but are effectively used to provide services, making them liable for GST. The ruling clarifies that when such deposits are retained and applied towards the society's operations or new member onboarding, they constitute a taxable event. This decision impacts how such financial arrangements within societies are treated for GST purposes.

Court :
Gujrat AAR

Brief :
M/s. The Capital Commercial Co-op. (Service) Society Limited, 717/1, Near Krishna Kunj, Sola, Ahmedabad-380060, Gujarat (herein after referred to as the “applicant” or the “Society” for the sake of brevity), is a registered Commercial Co- Operative service society providing services of maintenance of common facilities/amenities to their members. The applicant has collected money from their members under following heads:

Citation :
ADVANCE RULING NO. GUJ/GAAR/R/103/2020

GUJARAT AUTHORITY FOR ADVANCE RULING,
GOODS AND SERVICES TAX,
D/5, RAJYA KAR BHAVAN, ASHRAM ROAD,
AHMEDABAD – 380 009.

ADVANCE RULING NO. GUJ/GAAR/R/103/2020
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2020/AR/39)
Date:14 .10.2020

Name and address of the applicant : M/s. The Capital Commercial Co-op. (Service) Society Limited, 717/1, Near Krishna Kunj, Sola, Ahmedabad-380060, Gujarat.

GSTIN of the applicant : 24AAGAT1740F1ZS

Date of application :03.09.2020

Clause(s) of Section 97(2) of CGST/GGST Act, 2017, under which the question(s) raised. : (e) Determination of the liability to pay tax on any goods or services or both.
(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.

Date of Personal Hearing :24.09.2020 (through Video Conferencing)

Present for the applicant : CA Pratik P. Shah

B R I E F FA C T S:

M/s. The Capital Commercial Co-op. (Service) Society Limited, 717/1, Near Krishna Kunj, Sola, Ahmedabad-380060, Gujarat (herein after referred to as the “applicant” or the “Society” for the sake of brevity), is a registered Commercial Co- Operative service society providing services of maintenance of common facilities/amenities to their members. The applicant has collected money from their members under following heads:

1. Monthly maintenance fees (Recurring basis).

2. Common Maintenance Fund/Deposit (one-time basis).

To know more in details find the attachment file

FAQ :

Yes, if these non-refundable deposits are adjusted against new members or used for the society's services, they are considered taxable supplies under GST.

The deposits are taxable because they are not refunded but are adjusted against the cost of services provided to new members, making them a form of consideration for supply.

The ruling specifically addresses non-refundable deposits that are adjusted against new members. Refundable deposits or those held purely as security might be treated differently.

The ruling was made by the Gujarat Authority for Advance Ruling (GAAR) concerning Goods and Services Tax (GST).