2019 (10) TMI 35 - AAAR - GST

Appellate Authority rules PLS & car parking separate from construction services, no abatement.

In Re: The Assistant Commissioner of State Tax, Park Street Charge (M/s. Bengal Peerless Housing Development Company Limited)

The Appellate Authority modified the West Bengal Authority for Advance Ruling's decision, determining that no abatement for construction service applies ... Construction service - preferential location service (PLS) - Composite/principal supply - whether the supply of these services of PLS including floor rise, directional advantage constitutes a composite supply with construction service as the principal supply? - whether abatement prescribed for construction service under Sl. No. 3(i) read with Paragraph 2 of Notification No. 11/2017-CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1135-FT dated 28/06/2017), as amended from time to time is applicable on the entire value of such composite supply? HELD THAT:- The abatement, which is allowed on the value of construction service, as the plot of land on which construction is done is not liable to GST, cannot be deemed to be applicable in respect of PLS, which is altogether a separate service having no association with the land - It is clear from the said categorization that PLS should come under category no. 3(iii) as the other two categories are clearly defined. Abatement to the extent of 1/3rd of the total amount charged for supply of the service mentioned under Sl. No. 3(i) of the Rate Notification has been allowed under para 2 of the said Notification. No abatement has been provided for service mentioned under Sl. No. 3(iii) of the said Table. Thus, no abatement prescribed for construction service under Sl.No. 3(i) read with paragraph 2 of notification No. 11/2017-CT (Rate) dated 28-06-2017 (corresponding State Notification No. 1135-FT dated 28/06/2017) as amended form time to time is applicable on the value of Preferential Location Service realised separately from the buyers. Decision as above in respect of PLS will also hold for right to use car parking space. Appeal disposed off. Issues Involved:1. Whether the supply of Preferential Location Services (PLS) constitutes a composite supply with construction service as the principal supply.2. Applicability of abatement prescribed for construction service on the entire value of such composite supply.3. Inclusion of 'right to use car parking space' in the ruling.Detailed Analysis:1. Composite Supply of PLS with Construction Service:The West Bengal Authority for Advance Ruling (WBAAR) ruled that the Preferential Location Services (PLS), including floor rise and directional advantage, provided by BPHDCL, are part of a composite supply with construction service as the principal supply. The WBAAR relied on Section 2(30) of the GST Act, defining composite supply and concluded that the services are naturally bundled and supplied in conjunction with the construction service in the ordinary course of business. However, the Appellate Authority found that PLS, being attributable to the purchaser's choice, cannot be treated as naturally bundled with construction services in the ordinary course of business.2. Applicability of Abatement for Construction Service:The WBAAR held that the entire value of the composite supply, including PLS, should be treated for taxation as construction service, thereby allowing abatement. However, the Appellate Authority disagreed, stating that PLS is a separate service and should not be eligible for abatement. The Authority emphasized that PLS charges are separate from the construction service and should be taxed independently without any abatement.3. Inclusion of 'Right to Use Car Parking Space':The Appellant argued that the WBAAR's ruling included the 'right to use car parking space,' which was not part of the original query. The Appellate Authority agreed that the ruling on car parking space was beyond the scope of the original application for advance ruling. The Authority clarified that the decision regarding PLS would also apply to the right to use car parking space, treating it as a separate service not eligible for abatement.Conclusion:The Appellate Authority modified the WBAAR's ruling, holding that no abatement prescribed for construction service is applicable to the value of PLS, which is realized separately from the buyers. The decision also extends to the right to use car parking space, treating it as a separate service without abatement. The appeal was disposed of accordingly, and copies of the order were sent to both the Appellant and the Respondent for information.