GST to be separately charged on car parking taken with the Apartment: AAR

The Authority of the Advance ruling (AAR) has ruled out that the supply of services for the right to use of car parking space is a separate supply and not to be construed as a composite supply with the residential apartment.

The Applicant has asked if the services provided by the applicant for the right to use of car parking would be treated as a composite supply when the services is supplied along with the sale of under-constructed apartments and whether such supply shall be treated as Non-GST supply if the same is supplied after issuance of completion certificate of the apartments.

Right to use of car parking is naturally bundled with the apartment sale

The applicant contends that in the given case, the applicant is giving right to use of the car parking area to the customers of the applicant who opts for the same and it is not available to any person who doesn‟t owns a property within the complex of the applicant. Therefore, the right to use of car parking is naturally bundled with the apartment sale. Thus, having regard to the definition of composite supply supra, the applicant states that in its case also, the right to use of car parking space is to be treated as a composite supply of sale of apartment and the rate of GST applicable on such sale of apartment shall be applicable on the consideration charged by the applicant from the customers for such right to use of car parking space.

The applicant further contends that if the apartment is sold after receipt of the completion certificate by the competent authority as defined above, then in such case also, the transaction, being a composite supply of apartment sale shall be treated as a NON-GST supply under Schedule III and no GST shall be applicable on the entire consideration of the apartment as received by the applicant including that of right to use of car parking space.

However as per the ruling, in Both cases, the supply of services for the right to use of car parking space being a separate supply would be taxable @ 18%.

Car Parking altogether is a separate service

The applicant submits that the prospective buyers of a flat in the residential project are offered to avail right to use of car parking space for which separate consideration is payable by the buyers. Admittedly, it is at the choice of the buyers whether they would avail the facility or not. Further, an owner of a flat may avail this facility even after the issuance of completion certificate of the project. Furthermore, if there remains any unallotted car parking space after allocation among the intending buyers, it is offered to allottees desiring additional car parking space. The aforesaid fact delineates that such supply is altogether a separate service and cannot be treated as naturally bundled with the construction services.

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