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TMI Blog2023 (1) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... of residential apartment. Such agreement can be made prior to issuance of completion certificate or post-issuance of the same. In course of personal hearing, the authorised advocate of the applicant furnishes copies of some allotment letter and tax invoices issued by the applicant. Sample copies of invoices issued by the applicant for sale of apartment post receipt of completion certificate have also been furnished by the authorised advocate. Construction services under Heading 9954 specified at items (i), (ia), (ib), (ic) and (id) against serial number 3 of Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019, attract tax @ 1.5% and @ 7.5%, as the case may be w.e.f. 01.04.2019. Further, construction services under Heading 9954 specified at items (ie) and (if) against the aforesaid serial number attract tax @ 12% and @ 18% respectively - In the instant case, the applicant enters into agreement with prospective buyers for sale of residential apartment. Such agreement can be made prior to issuance of completion certificate or post-issuance of the same. Admittedly, it is at the choice of the buyers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression GST Act would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be in the business of construction of residential apartments intended for sale to buyers. It is submitted that the prospective buerys are given an option to opt for car parking space along with the apartment being booked by them and accordingly the buyers who opt for availing the car parking facility also, are charged a certain sum towards right to use of car parking space and the same forms part of the total consideration charged by the applicant towards sale of the apartment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach the applicant for booking of apartments therein. 2.2 The applicant states that the prospective customers are given an option to opt for car parking space along with the apartment being booked by the customers and accordingly the customers who opt for availing the car parking facility, are charged a certain sum towards right to use of car parking space and the same forms part of the total consideration charged by the applicant towards sale of the apartment by the applicant. 2.3 The applicant states that in the present scenario, the applicant is treating the services of right to use of car parking space as a composite supply of services along with the sale of under construction apartment service and hence is discharging GST on the said amounts received towards car parking space at the rate of 6% CGST and 6% WBGST on such amounts received as per Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended from time to time. 2.4 The applicant further states that when the said units are sold after receipt of the completion certificate from the competent authority along with the right to use of car parking space, the applicant doesn t charge any GST on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of [sub-sections (1), (1A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as - (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. c. SCHEDULE III [See Section 7] ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. d. SCHEDULE II [See Section 7] ACTIVITIES [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 5. Supply of services The following shall be treated as supply of services, namely:- (b) construction of a complex, building, civil structure or a part thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Housing Development Company Ltd [AAR] 2019-TIOL-137-AAR-GST wherein it was held as- Construction service is the dominant element in the bundle of services provided - buyers of the service of constructing dwelling units in such upscale residential complexes expect, apart from the preferential location of the dwelling unit, the right to use car parking space and enjoyment of common areas and facilities like landscaped gardens, gym, conference hall, club with swimming pool etc. and which are usually bought as a bundle while booking the flat - it is, therefore, reasonable to conclude that such services are naturally bundled and offered in conjunction with one another in the ordinary course of business and the other services are ancillary to the supply of construction service, which is the essential supply - applicant is, therefore, providing a composite supply, construction being the principal supply - entire value of composite service is to be treated, for the purpose of taxation, as supply of construction service, taxable under sl. No. 3(i) r/w paragraph 2 of notification 11/2017-CTR: AAR . 2.9 The applicant submits that the above view was also confirmed by the Hon ble WBAAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned from the revenue may be summarized as follows: 3.1 As per section 2(30) of the GST Act, composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. But the right to use of the car parking area to the customers of the applicant does not come combined with the purchase of the property. In the applicant s own words it is available to those customers only who have opted for such facility and it is also apparent that a customer can opt for such right to use or service even after purchasing the property. Hence, such supply of service cannot be called a composite supply . 3.2 In the instant case, the right to use of car parking space for valuable consideration which rightfully falls within the scope of supply of service but does not fall within the scope of Para 5(b) of SCHEDULE II as it is purely the supply of a service to provide the facility of parking car in a space. The ownership of the said space is not being tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the applicant enters into agreement with prospective buyers for sale of residential apartment. Such agreement can be made prior to issuance of completion certificate or post-issuance of the same. In course of personal hearing, the authorised advocate of the applicant furnishes copies of some allotment letter and tax invoices issued by the applicant. Sample copies of invoices issued by the applicant for sale of apartment post receipt of completion certificate have also been furnished by the authorised advocate. We find that the price of the apartment and consideration for right to use of open parking space have been separately mentioned in the allotment letters. The payment schedules for the aforesaid services have also been specified in a separate manner. However, the applicant has charged tax @ 18% on 2/3rd of the apartment value as well as 2/3rd of basic parking value thereby allowing abatement to the extent of 1/3rd of the consideration being deemed value of land. On the other hand, the applicant issues bill of supply where the sale of apartment and right to use of parking space are made post issuance of completion certificate and the applicant has not charged any tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as above in respect of PLS will also hold for right to use of car parking space. It thus appears that the Hon ble WBAAAR has held that the abatement prescribed in respect of value of transfer of land or undivided share of land is not admissible for preferential location services as well as right to use of car parking space which are altogether separate services having no association with the land. 4.7 We also do not find any reason to hold a different view from what is taken by the Hon ble WBAAAR. The applicant submits that the prospective buyers of a flat in the residential project are offered to avail right to use of car parking space for which separate consideration is payable by the buyers. Admittedly, it is at the choice of the buyers whether they would avail the facility or not. Further, an owner of a flat may avail this facility even after the issuance of completion certificate of the project. Furthermore, if there remains any un-allotted car parking space after allocation among the intending buyers, it is offered to allottees desiring additional car parking space. The aforesaid fact delineates that such supply is altogether a separate service and cannot be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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