The transfer of business as a going concern as a whole or independent part thereof is considered as service. However, the same has been specifically exempted from the levy of GST via Notification No. 12/2017-CT(R).
Levy of GST- Section 7 of CGST Act- In the instant case, applicant the AAI has invited bids for undertaking the operation, management and development of certain airports of the AAI on a public private partnership basis to bring efficiency in service delivery, expertise, enterprise and professionalism and to harness necessary investment. M/s. Adani Enterprises Limited had won the bid of the airport quoting highest bid among all.
Questions on which Advance Ruling is sought:
1. Whether the transfer of business by the AAI to the M/s. Adani Ahmedabad International Airport Limited be treated as Supply u/s. 7 of the Central Goods and Service Tax Act, 2017 (“CGST”) viz-a-viz Gujarat State Goods and Service Tax Act, 2017 (“GSGST”)?
2. Whether the transfer of business by AAI to M/s. Adani Ahmedabad International Airport Limited is treated as supply as going concern and covered in clause 4 of Schedule II of CGST Act viz-a-viz GSGST?
3. Whether the transfer of business by AAI to M/s. Adani Ahmedabad International Airport Limited is covered under the Entry No. 2of the exemption notification No 12/2017 – Central Tax (Rate) dated 28-06-2017 issued u/s Section 11 of CGST Act 2017?
4. If the answer is negative, then whether GST is leviable on the transfer of Existing assets (“RAB”), Aeronautical Assets, non-aeronautical assets and Capital work in progress by AAI to the M/s. Adani Ahmedabad International Airport Limited?
5. Whether the aforesaid transfer of asset be treated as services and the classification for the same?
6. Whether the concession fees paid by M/s. Adani Ahmedabad International Airport Limited to AAI be treated as consideration for transfer of business?
7. Whether GST is applicable on Monthly/Annual concession fees charged by the AAI on the M/s. Adani Ahmedabad International Airport Limited?
8. Whether GST is leviable on the invoice raised by AAI for reimbursement of the salary/ staff cost on M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
9. Whether GST is applicable on the reimbursement claimed of Municipal tax, Property Tax and Water Charges by the AAI from M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
10.Whether GST is applicable on transfer of spares and consumables for consideration by the AAI to M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
Held that-
1. The Subject Supply of ‘Transfer of Going Concern service’ is Supply under Section 7 CGST Act.
2. i. The subject Supply is ‘Transfer of Going Concern Service’.
ii. Schedule II (4) CGST Act refers to activities or transactions relating to Transfer of business assets to be treated as supply of goods or supply of services. Therefore, in present case, there arises no need to examine Schedule II(4) CGST Act.
3. The subject Supply is covered at Entry No. 2 of Notification 12/2017-CT (R).
4. Ruling not required, in pursuance to Ruling at serial no 3.
5. Ruling not required, in pursuance to Rulings at serial no 2 & 3.
6. Concession Fee is a part of the Consideration paid by SPV to AAI in subject matter.
7. The consideration for the subject Supply is exempt from GST vide Entry No. 2 of Notification 12/2017-CT (R) dated 28-6-2017.
8. Ruling same as at Sr no 7. Further, the issue of reimbursement of staff cost has arisen in pursuance to the terms of subject Contract dated 14-2-20 wherein the ‘the Supply of Transfer of Going concern Service’ is exempt from GST. The contract is for ‘transfer of going concern service’, therefore the consideration / re-imbursement of cost is exempt from GST.
9. Ruling same as at Sr. No 7. Further, the issue of reimbursement has arisen in pursuance to the terms of subject Contract dated 14-2-20 wherein the ‘Supply of Transfer of Going concern Service’ is exempt from GST. The contract is for ‘transfer of going concern service’, therefore the consideration / re-imbursement of cost is exempt from GST
10. GST on proposed supply of spares and consumables by AAI to SPV, these supplies being outside the scope of subject contract, is leviable to tax as per law, as discussed at paragraph 27.3 of this Ruling.
The transfer of business as a going concern as a whole or independent part thereof is considered as service. However, the same has been specifically exempted from the levy of GST via Notification No. 12/2017-CT(R).
Levy of GST- Section 7 of CGST Act- In the instant case, applicant the AAI has invited bids for undertaking the operation, management and development of certain airports of the AAI on a public private partnership basis to bring efficiency in service delivery, expertise, enterprise and professionalism and to harness necessary investment. M/s. Adani Enterprises Limited had won the bid of the airport quoting highest bid among all.
Questions on which Advance Ruling is sought:
1. Whether the transfer of business by the AAI to the M/s. Adani Ahmedabad International Airport Limited be treated as Supply u/s. 7 of the Central Goods and Service Tax Act, 2017 (“CGST”) viz-a-viz Gujarat State Goods and Service Tax Act, 2017 (“GSGST”)?
2. Whether the transfer of business by AAI to M/s. Adani Ahmedabad International Airport Limited is treated as supply as going concern and covered in clause 4 of Schedule II of CGST Act viz-a-viz GSGST?
3. Whether the transfer of business by AAI to M/s. Adani Ahmedabad International Airport Limited is covered under the Entry No. 2of the exemption notification No 12/2017 – Central Tax (Rate) dated 28-06-2017 issued u/s Section 11 of CGST Act 2017?
4. If the answer is negative, then whether GST is leviable on the transfer of Existing assets (“RAB”), Aeronautical Assets, non-aeronautical assets and Capital work in progress by AAI to the M/s. Adani Ahmedabad International Airport Limited?
5. Whether the aforesaid transfer of asset be treated as services and the classification for the same?
6. Whether the concession fees paid by M/s. Adani Ahmedabad International Airport Limited to AAI be treated as consideration for transfer of business?
7. Whether GST is applicable on Monthly/Annual concession fees charged by the AAI on the M/s. Adani Ahmedabad International Airport Limited?
8. Whether GST is leviable on the invoice raised by AAI for reimbursement of the salary/ staff cost on M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
9. Whether GST is applicable on the reimbursement claimed of Municipal tax, Property Tax and Water Charges by the AAI from M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
10.Whether GST is applicable on transfer of spares and consumables for consideration by the AAI to M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
Held that-
1. The Subject Supply of ‘Transfer of Going Concern service’ is Supply under Section 7 CGST Act.
2. i. The subject Supply is ‘Transfer of Going Concern Service’.
ii. Schedule II (4) CGST Act refers to activities or transactions relating to Transfer of business assets to be treated as supply of goods or supply of services. Therefore, in present case, there arises no need to examine Schedule II(4) CGST Act.
3. The subject Supply is covered at Entry No. 2 of Notification 12/2017-CT (R).
4. Ruling not required, in pursuance to Ruling at serial no 3.
5. Ruling not required, in pursuance to Rulings at serial no 2 & 3.
6. Concession Fee is a part of the Consideration paid by SPV to AAI in subject matter.
7. The consideration for the subject Supply is exempt from GST vide Entry No. 2 of Notification 12/2017-CT (R) dated 28-6-2017.
8. Ruling same as at Sr no 7. Further, the issue of reimbursement of staff cost has arisen in pursuance to the terms of subject Contract dated 14-2-20 wherein the ‘the Supply of Transfer of Going concern Service’ is exempt from GST. The contract is for ‘transfer of going concern service’, therefore the consideration / re-imbursement of cost is exempt from GST.
9. Ruling same as at Sr. No 7. Further, the issue of reimbursement has arisen in pursuance to the terms of subject Contract dated 14-2-20 wherein the ‘Supply of Transfer of Going concern Service’ is exempt from GST. The contract is for ‘transfer of going concern service’, therefore the consideration / re-imbursement of cost is exempt from GST
10. GST on proposed supply of spares and consumables by AAI to SPV, these supplies being outside the scope of subject contract, is leviable to tax as per law, as discussed at paragraph 27.3 of this Ruling.