Sale of Residential Apartments to Buyers does not include Parking Space in Composite Supply, subject to 18% GST: AAR [Read Order]

The bench of Brajesh Kumar Singh and Jyojit Banik of Authority of Advance Ruling (AAR), West Bengal ruled that the supply of services for the right to use car parking space would be taxable @ 18%.

The applicant Eden Real Estates Pvt. Ltd. engaged in the business of construction of residential apartments intended for sale to buyers.

Based on the applicant, the services of right to use car parking space as a composite supply of services along with the sale of under construction apartment service.

Further, Goods and Service Tax on the said amounts received towards car parking space at the rate of 6% Central Goods and Service Tax (CGST) and 6% West Bengal Goods and Service Tax (WBGST) levied on such amounts received as per Notification No. 11/2017- Central Tax (Rate).

The claimant further asserted that the right to use a parking space is to be treated as a composite supply of the sale of an apartment and that the GST rate applicable to such a sale shall apply to the consideration collected from customers by the applicant for such a right to use a parking space.

In juxtaposition, the department argued that the right to use a car parking space for payment, which is legitimately within the scope of service supply but does not fall within the scope of Line of text 5(b) of Schedule II as it is purely a service to provide the facility of parking a car in a space, does not fall within the scope of that provision. In this case, the buyer does not become the owner of the aforementioned space.

The authority observed that the provision of services for the right to use a parking space is a separate supply and should not be perceived as a composite supply of construction of residential apartments. Thus shall be taxable at 18% from the buyers.

To Read the full text of the Order CLICK HERE

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