Builder liable to Service Tax on Sale of Parking Space of Residential Complex: CESTAT [Read Order]

Parking Space - Service Tax - Taxscan

The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the amount charged by the builder in respect of sale of the parking space from the customers is liable to be included in the value of the services and the same is subject to Service Tax.

The appellant is engaged in providing “Construction of Residential Complex Services”. The sole issue was that the appellants were not including the amount charged from their customers in respect of parking space while discharging their Service Tax liability.

The department took a stand that the consideration for the parking space is an integral part of the residential complex constructed by the appellant and the value of the same has to be included in the value of the services.

On perusal of the definition of ‘Residential Complex Service’, under the Finance Act,1994, the bench observed that the parking space specifically stands included in Serial No.(iii) of the definition. “If that be so, it has to be held that parking space is a part and parcel of the services falling under the category of “Residential Complex Services,” the bench said.

Dismissing the appeal filed by the appellant, the bench concluded that “As already observed parking space having been specifically included in the definition of ‘Residential Complex Service’, the same would get covered by the definition of the said services. In fact the new definition of “Preferential Location Services” specifically excludes the parking place which means that parking services do not get covered by the new definition. As such, we hold that consideration received by the appellant from their buyer on account of sale of parking space is a part and parcel of the services falling under the category of ‘Residential Complex Construction Services’ and its value has to be added in the value of above services.”

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