‘Supply of Transfer of Going concern Service’ is exempt from GST: AAR [Read Order]

The Gujarat Authority of Advance Ruling (AAR) ruled that ‘Supply of Transfer of Going concern Service’ is exempt from GST.

The applicant, M/s. Airport Authority of India is an authority created under the Airport Authority of India Act, 1994 (AAI Act). The AAI Act was enacted to provide for the constitution of the AAI for the better administration and cohesive management of the airports. AAI has been created for the purpose of establishing or assisting in the establishment of airports and for the matters connected thereto. As per Chapter III, Section 12(1), (2) of AAI Act, the functions of the AAI are to manage the airports, the civil enclaves and the aeronautical communication stations efficiently; to provide air traffic service and air transport service at any airport.

The applicant has sought the advance 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); 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; 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; Whether the aforesaid transfer of asset be treated as services and the classification for the same; Whether the concession fees paid by M/s. Adani Ahmedabad International Airport Limited to AAI be treated as consideration for transfer of business; Whether GST is applicable on Monthly/Annual concession fees charged by the AAI on the M/s. Adani Ahmedabad International Airport Limited; 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; 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; 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.

The coram of Sanjay Saxena and Arun Richard the Subject Supply of ‘Transfer of Going Concern service’ is Supply under Section 7 CGST Act. The subject Supply is ‘Transfer of Going Concern Service’. 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. The subject Supply is covered at Entry No. 2 of Notification 12/2017-CT(R). Concession Fee is a part of the Consideration paid by SPV to AAI in subject matter. The consideration for the subject Supply is exempt from GST vide Entry No. 2 of Notification 12/2017-CT( R) dated 28-6-2017. 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. 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. 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.

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