Parking space rights sold with under-construction apartments constitute separate supply attracting 18% GST under Section 7

AAR West Bengal ruled that charges for car parking space rights sold with under-construction apartments constitute a separate supply, not a composite supply with construction services. The parking space service attracts 18% GST when supplied independently. However, if parking rights are bundled naturally with apartment sales before completion certificate issuance, they may be treated as non-GST supply. The ruling clarifies that parking space allocation is optional for buyers and can occur post-completion, establishing it as a distinct service separate from construction activities.

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Issues Involved:
1. Composite supply of construction services and right to use car parking space.
2. Rate of tax applicable on charges for right to use car parking space.
3. Taxability of charges for right to use car parking space when apartments are sold post-completion certificate.
4. Taxability of charges for right to use car parking space collected after the sale of the apartment.

Detailed Analysis:

Composite Supply of Construction Services and Right to Use Car Parking Space
The primary issue was whether the amounts charged for the right to use car parking space along with the sale of under-construction apartments should be treated as a composite supply of construction services or as a distinct supply under Section 7 of the CGST/WBGST Act, 2017. The applicant argued that the right to use car parking space is naturally bundled with the sale of the apartment, thus constituting a composite supply. However, the Authority for Advance Ruling (AAR) observed that the right to use car parking space is offered as an option to buyers and can be availed even after the sale of the apartment. Therefore, it is a separate service and not naturally bundled with the construction services. The ruling concluded that the supply of services for the right to use car parking space is a distinct supply and not a composite supply of construction services.

Rate of Tax Applicable on Charges for Right to Use Car Parking Space
Given that the right to use car parking space is a distinct supply, the applicable rate of tax on such charges was determined. The AAR ruled that the supply of services for the right to use car parking space is taxable at 18%.

Taxability of Charges for Right to Use Car Parking Space When Apartments Are Sold Post-Completion Certificate
The applicant contended that if apartments are sold after receiving the completion certificate, the transaction, including the right to use car parking space, should be treated as a non-GST supply under Schedule III of the CGST/WBGST Act, 2017. However, the AAR ruled that even in such scenarios, the supply of services for the right to use car parking space remains taxable.

Taxability of Charges for Right to Use Car Parking Space Collected After the Sale of the Apartment
The final issue was whether the taxability would change if charges for the right to use car parking space are collected after the sale of the apartment. The AAR ruled that in such scenarios, tax is still payable on the supply of services for the right to use car parking space, maintaining consistency with the earlier conclusions.

Conclusion:
The Authority for Advance Ruling concluded that:
1. The supply of services for the right to use car parking space is a separate supply and not a composite supply of construction services.
2. The applicable tax rate on charges for the right to use car parking space is 18%.
3. Charges for the right to use car parking space remain taxable even when apartments are sold post-completion certificate.
4. Charges for the right to use car parking space collected after the sale of the apartment are also taxable.

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