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TMI BlogRight to use of parking space with sale of apartments is not a composite supplyX X X X Extracts X X X X X X X X Extracts X X X X ..... Right to use of parking space with sale of apartments is not a composite supply - By: - CA Bimal Jain - Goods and Services Tax - GST - Dated:- 19-1-2023 - - The AAR, West Bengal in the matter of IN RE: M/S. EDEN REAL ESTATES PRIVATE LIMITED [2023 (1) TMI 81 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL] has ruled that providing the right to use of car parking space along with the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of apartments doesn t constitute composite supply. The supply of services for the right to use of parking space would be taxable at 18% Goods and Services Tax ( GST ). Facts: M/s. Eden Real Estates Private Limited ( the Applicant ) is in the business of construction of residential apartments intended for sale. An option to opt for parking space along with the apartments is given to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prospective buyers and they are charged extra for the same. The Applicant treats the right to use a parking space as a composite supply of services along with the sale of an under construction apartment, and as a result, the Applicant is discharging GST on the said amounts received for the car parking space at the rate of 12% GST on such amounts received as per Notification No. 11/2017- C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Tax (Rate) dated June 28, 2017 ( the Services Rate Notification ). The Applicant also claims that it does not charge any GST on the aforementioned units and the right to use a parking space, when they are sold after receiving the completion certificate from the appropriate authority as such sales are regarded as non-GST supplies under the terms of Schedule III of the Central Goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Services Tax Act, 2017 ( the CGST Act ). The Applicant has contended that it is giving the option to opt for right to use parking space only to buyers of the apartment. Thus, the right to use such car parking is naturally bundled to the sale of the apartment and hence it shall be treated as composite supply. The Revenue on the other hand contended that the right to use the parking spac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in not naturally bundled with the purchase of the apartment. It is available to such buyers who opt for it and the buyer can avail such facility even after purchasing the apartment. Issues: Whether the amounts charged by the Applicant for the right to use of parking space along with the sale of apartments to be treated as a composite supply? If the same is not to be treated as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... composite supply, then the rate of tax applicable on such charges collected by the Applicant? If such apartments are sold after receipt of completion certificate, then whether the amounts collected for right to use of car parking space will also be treated as a non-GST supply? Whether the taxability would change if such charges for the right to use of car parking space is collected after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the apartment has been done? Held: The AAR, West Bengal in IN RE: M/S. EDEN REAL ESTATES PRIVATE LIMITED [2023 (1) TMI 81 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL] held as under: Observed that, the Applicant is not charging GST on sale done after issuance of completion certificate. Noted that, availing the right to use of parking is a choice of the buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and an owner may avail this facility at a later period as well. Further, owners can avail multiple parking spaces as well, subject to vacancy. Therefore, the supply of such parking service is completely separate and cannot be treated as naturally bundled with the construction service. Relied on the AAAR, West Bengal ruling in the matter of IN RE: THE ASSISTANT COMMISSIONER OF STATE TAX, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PARK STREET CHARGE (M/S. BENGAL PEERLESS HOUSING DEVELOPMENT COMPANY LIMITED) - 2019 (10) TMI 35 - APPELLATE AUTHORITY FOR ADVANCE RULING, WEST BENGAL wherein it was held that the right to preferential location services and the right to use a parking space are completely different services that have no association with the land. Held that, the supply of services for the right to use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parking space is a separate supply and cannot be treated as composite supply of construction of residential apartment services and will be taxable at 18% GST. Further held that, if apartments are sold after receipt of completion certificate from the competent authority, tax will be payable on supply of services of right to use of car parking space. Further held that, if charges for right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of car parking space is collected after the sale of the apartment has been done, tax is payable on supply of services for right to use of car parking space. (Author can be reached at [email protected] ) - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xTMI - TMITax ..... 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