Sale or Right to Use Car Park is not Bundled with Construction Services, attracts 18% GST : AAAR

In a recent ruling, the West Bengal Appellate Authority for Advance Ruling (WBAAAR) upheld the ruling of the Authority for Advance Ruling (AAR) that supply of services for the right to use car parking space would be taxable @ 18%.

The bench stated that sale or right to use a car park is not naturally bundled with construction services.

Eden Real Estates Pvt. Ltd., the applicant, engaged in the development of residential flats for sale to consumers. According to the applicant, the sale of an apartment that is still being built out and the right to use a parking space together constitute a composite supply of services and

hence is discharging Goods and Services Tax on the amounts received on car parking space at the rate 12%.

However, from the appellate authority ruling it made clear that it will not be treated as a composite supply and will attract Goods and Services Tax at the higher rate of 18%. Both the authorities have denied the claim of the assessee that sale of an apartment and right to use parking space is a composite supply of services.

The bench of Brajesh Kumar Singh and Jyojit Banik of West Bengal Authority for Advance Ruling (AAR) 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.

The applicant submitted that the car parking space is only given to flat buyers and stamp duty is paid on the entire consideration. However, the AAAR bench observed that prospective flat buyers may or may not opt for a car parking space when booking their flat.

Thus, the argument that the facility of the right to use open parking space is naturally bundled with construction services and is a composite supply fails.

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