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Right to use of car parking would not be treated as a composite supply under GST-AAAR(Appellate Authority for Advance Ruling)

Name of the Applicant:               Eden Real Estates Private Limited

State:                                            West Bengal

AAAR Member:                          Mr Brajesh Kumar Singh, Joint Commissioner, CGST & CX ,

Mr Joyjit Banik, Senior Joint Commissioner, SGST

Order No. & Date :                    19/WBAAR/2022-23 dt. 22.12.2023

Fact of the Case: The applicant is stated to be in the business of construction of residential apartments intended for sale to buyers. It is submitted that the prospective buyers are given an option to opt for car parking space along with the apartment being booked by them and accordingly the buyers who opt for availing the car parking facility also, are charged a certain sum towards right to use of car parking space and the same forms part of the total consideration
charged by the applicant towards sale of the apartment by the applicant.

Question before the AAAR: Whether the services provided by the applicant for right to use of car parking would be treated as a composite supply when the services is supplied along with 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.

Pronouncement : AAAR(Appellate Authority for Advance Ruling) upheld the decision of AAR(Authority for Advance ruling  and holds that sale/right to use car parking (covered or uncovered) is not naturally bundled with construction services and hence, cannot be treated as ‘composite supply’ of construction services.

Further Observes that the prospective buyers of the Appellant’s residential project, are given the option to opt for car parking space along with the apartment being booked by the customers, so the buyer may or may not opt for same.

Therefore, by looking at the definition of ‘composite supply’ u/s 2(30),  facility of right to use of open parking space is naturally bundled with the construction services fails. Further, AAAR explains that though a sanctioned plan requires inclusion of parking layout, an uncovered parking space such as open parking area is not included in the definition of “garage” under the RERA, but falls within the meaning of “common area” which belongs to all apartment owners; Further states that said ‘common area’ may be leased out by the owners’ association on joint agreement of its members, but in this case Appellant has no right to transfer ownership or lease out or allow right to use of the said spaces to allottees”

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