Kerala HC Judgment in the case of IMA & its Impact on GST for RWAs

GST UPDATEZ ON 23-04-2025 by R.SRIVATSAN, IRS, NACIN, CHENNAI

The Kerala High Court’s recent landmark decision in the case of Indian Medical Association vs. Union of India (April 2025) held that transactions between a members association and its members do not constitute “supply” under GST.

The Court struck down the retrospective insertion of Section 7(1)(aa) of the CGST Act 2017 and upheld the doctrine of mutuality, emphasizing that no service can be rendered by an association to its own members, as both are part of the same entity.

In corollary, this judgment directly questions the validity of GST being levied on maintenance charges collected by Resident Welfare Associations (RWAs) from their members.

The Current GST Position on RWA Charges is that

GST is leviable @18% on maintenance charges exceeding Rs. 7,500/month per member.

If the monthly contribution is above Rs. 7,500, the entire amount becomes taxable, not just the excess.

The annual aggregate turnover of the RWA should be more than Rs.20 lakhs in a financial year.

So, what impact the IMA Judgment can bring ?

The ruling reaffirms the principle of mutuality, which applies equally to RWAs too.

It inherently suggests that collections by RWAs from members are not “consideration for supply”, but mutual contributions.

Thus, GST on such maintenance charges could be considered unconstitutional, especially when the RWA is a pure members organization with no commercial activities.

The decision strengthens the contentions of RWAs and cooperative societies seeking exemption under the mutuality principle.

Well….

The court underscored that, under the Constitution, a valid taxable transaction requires two distinct parties—a supplier and a recipient.

Prima Facie, the decision (Kerala High Court) seems to do away with the requirement of paying any GST.

However, let us be clear that as per the prevailing GST provisions, RWAs are required to collect GST on monthly maintenance charges only if both of the following conditions are met:

1.The monthly maintenance contribution per unit exceeds ₹7,500.

2.The RWA’s total annual turnover from the supply of goods and services exceeds ₹20 lakh.

If both conditions are satisfied, GST is applicable on the entire maintenance amount, not just the portion exceeding ₹7,500. This clarification is consistent with the government’s earlier communications and serves to eliminate ongoing confusion among RWAs and house owners regarding GST liabilities.

Be it as it may, the finality rests with the Supreme Court, if the Union of India appeals the Kerala HC ruling.