Supply of services for right to use of car parking space would be taxable at 18%: AAR

Case Details: Authority for Advance Rulings, West Bengal Eden Real Estates (P.) Ltd., In re - [2023] 146 taxmann.com 459 (AAR-WEST BENGAL)

Judiciary and Counsel Details

• • Brajesh Kumar Singh & Joyjit Banik, Member
  • Ankit Kanodia, Adv. for the Applicant.

Facts of the Case

The applicant was developing a residential housing project and supplying construction services to recipients for possession of dwelling units. In addition to construction services, the applicant would also provide services towards right to use of car parking space to prospective buyers for which they would be additionally charged by applicant. It filed an application for advance ruling to determine whether amount charged for right to use of car/two wheeler vehicle parking space along with sale of under constructed apartments to its prospective buyers would be treated as a composite supply of construction of residential apartment services or not.

AAR Held

The Authority for Advance Ruling noted that prospective buyers of a flat in the residential project would be offered to avail right to use of car parking space for which separate consideration shall be payable by the buyers. It would be the choice of the buyers whether they would avail the facility or not. Furthermore, if there shall remain any unallotted car parking space after allocation among the intending buyers, it would be offered to allottees desiring additional car parking space. This fact clearly delineated that such supply would be altogether a separate service and it can’t be treated as naturally bundled with construction services.

Hence, it was held that supply of services for right to use of car parking space would be a separate supply and not to be construed as a composite supply of construction of residential apartment services. It was also held that supply of services for right to use of car parking space would be taxable at 18%.