Parking space charges are separate GST supply at 18%, not part of apartment construction services

The AAAR-WB ruled that charges for right to use car/two wheeler parking spaces constitute a separate supply under GST Act, taxable at 18%, distinct from apartment construction services. The authority held that open parking spaces fall under "common area" per RERA and cannot be sold/transferred by promoters to allottees. The parking charges do not qualify as composite supply with construction services since they are independent services not naturally bundled together. One-third abatement on land valuation for parking is not applicable as common areas are already considered in apartment valuation. Appeal disposed.

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Issues Involved:
1. Whether the amounts charged for the right to use car/two-wheeler vehicle parking space along with the sale of under-construction apartments are to be treated as a composite supply or a distinct supply under section 7 of the CGST/WBGST Act, 2017.
2. The rate of tax applicable on such charges if not treated as a composite supply.
3. Tax treatment of amounts collected for the right to use car parking space post-receipt of the completion certificate.
4. Taxability of charges for the right to use car parking space if collected after the sale of the apartment.

Summary:

Issue 1: Composite Supply vs. Distinct Supply
The Appellant argued that the right to use car parking space is an ancillary supply to the principal supply of residential apartment construction services, thus constituting a composite supply. However, the WBAAR observed that since the parking facility is optional and not naturally bundled with the construction services, it should be treated as a distinct supply. Consequently, the right to use parking space is not a composite supply under section 7 of the CGST/WBGST Act, 2017.

Issue 2: Applicable Tax Rate
The WBAAR ruled that the GST rate applicable for the supply of services for the right to use open parking space is 18% (CGST 9% + WBGST 9%) without any abatement on the value of land. The Appellant's argument for a lower tax rate due to composite supply was rejected.

Issue 3: Post-Completion Certificate Sales
For apartments sold after receiving the completion certificate, the WBAAR ruled that the consideration for the right to use parking space is a separate service and not bundled with the apartment sale. Therefore, the consideration for the apartment is treated as non-GST, while the parking space service is taxable.

Issue 4: Charges Collected After Sale
The WBAAR confirmed that if charges for the right to use parking space are collected after the sale of the apartment, they remain a separate service and are not naturally bundled with the construction services. Thus, they do not qualify as a composite supply and are subject to the standard GST rate.

Final Ruling:
The Appellate Authority upheld the WBAAR's decision, confirming that the right to use car parking space constitutes a separate supply under the GST Act and is taxable at 18%. The appeal was dismissed, and the WBAAR's ruling was affirmed.

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