The West Bengal Appellate Authority of Advance Ruling in an appeal filed by the Assistant Commissioner of State Tax against the order in an application filed by M/s Bengal Peerless Housing Development Co Ltd (BPHDCL) held that that no abatement has been prescribed for construction service under Sl No. 3(i) read with para 2 of Notification Number 11/2017 – Central Tax (Rate) dated 28.06.2017 is applicable on the value of PLS realized separately from the buyers.
BPHDCL, a joint venture of the West Bengal Housing Board and the Peerless General Finance and Investment Company Ltd for developing real estate projects in West Bengal is engaged in the development of a residential housing project named ‘Avidipta II’ and supplying construction service to the recipients for possession of dwelling units in the year 2023. In addition to the construction service, BPHDCL provides services like preferential location services (PLS), which includes services of floor rise and directional advantage.
The issue before the present authority is the determination of whether the supply of these services of PLS including floor rise, directional advantage constitutes a composite supply with construction service as the principal supply and whether abatement prescribed for construction service is applicable on the entire value of such composite supply.
The Appellant submitted that the PLS charges cannot be traced directly to the value of any goods or value of land but are a result of the development of complex as a whole and the position of a particular unit in context with that of the complex.
The WBAAR in its order accepted the claim of the builder that they are providing a composite supply, construction service being the main supply and the other ones are incidental or ancillary to the construction service further stating the supply to be naturally bundled.
The Bench constituting of Hon’ble Members Mr. APS Suri and Ms. Smaraki Mahapatra held that no abatement has been prescribed for construction service under Sl No. 3(i) read with para 2 of Notification Number 11/2017 – Central Tax (Rate) dated 28.06.2017 is applicable on the value of PLS realized separately from the buyers.
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