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2019 (5) TMI 311

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..... developers of residential complexes usually offer these services in a bundle. Although one has the option not to pay for the right to use car parking space, he cannot buy it, or for that matter any other service in the bundle, separately. The recipient has to buy these services only as a package, where the construction service remains the predominant element. Thus, the services are naturally bundled and offered in conjunction with one another in the ordinary course of business, and the other services of the bundle are ancillary to the supply of the construction service, which describes the essential character of the bundle of services being supplied. The Applicant is providing a composite supply of the bundle of services, construction serv .....

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..... pplying construction service to the recipients for possession of dwelling units in the year 2023. The Applicant is enjoying abatement, prescribed for construction service under Sl No. 3(i) read with Paragraph 2 of Notification No 11/2017 - CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1135-FT dated 28/06/2017), as amended from time to time; hereinafter collectively called the Rate Notification. In addition to the construction service, the Applicant provides services like preferential location service, which includes services of floor rise and directional advantage. It seeks a ruling on whether the supply of these services constitutes a composite supply with construction service as the principal supply, and if so, whether .....

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..... above single consolidated price. Other charges, deposits and taxes are separately recovered. The Applicant s question is limited to what is being offered to the buyers of the HIG category of flats. 2.2 In its Written Submission the Applicant makes out a case for treating the supply of services of directional advantage and benefit of floor rise as integral to supply of construction service. The Applicant provides construction service to a recipient only after the Agreement is signed and other terms and conditions laid down in the Agreement are fulfilled. It is, therefore, absolutely clear from the context that the construction service is being provided only with respect to the dwelling unit allotted and after the allotment money paid. Supply .....

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..... f Sl No. 3 of the Rate Notification may be considered for the purpose of taxation. 4. Observation & Findings of the Authority 4.1 The Agreement refers to the sale of an immovable property. It is relevant so far as construction service (SAC 9954) is offered, assuring coming into being of the immovable property. The buyer also agrees to pay in advance for certain other services that he will enjoy after obtaining possession of the property. They include inter alia the service of preferential location (SAC 9985), right to use the car parking space and the common areas and facilities (SAC 9972). The buyer agrees to pay a single consolidated amount for all these supplies (refer to clause 2.1 of the Agreement). The question that needs to be ex .....

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..... st to other combinations, the services that are naturally bundled can be treated as provisioning of a single service that lends the bundle its essential character (Section 9.2.1 of the Education Guide). The Education Guide illustrates with the example of convention service that a star hotel provides to the delegates when it charges a lump sum for a package of services, including accommodation, breakfast, conference facility, business centre, gym etc. All these services can be separately provided. However, they can also be combined together while charging for convention service, which describes the essence of the package. It is the predominant element of the combination of services being supplied. Another example is works contract service, w .....

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..... a taxable person and the services offered in the bundle described in para 3.1 are taxable services. It is also clear from the context that construction service is the dominant element in the bundle described in para 3.1 above. Moreover, the recipient, while agreeing to buy these services as a bundle, cannot enjoy the other services unless he agrees to buy the service of constructing the allotted dwelling unit. Furthermore, developers of residential complexes usually offer these services in a bundle. Although one has the option not to pay for the right to use car parking space, he cannot buy it, or for that matter any other service in the bundle, separately. The recipient has to buy these services only as a package, where the construction se .....

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