Business Transfer as Going Concern Exempt from GST under Notification No. 12/2017-Central Tax

The authority ruled that the transfer of the business as a going concern to the buyer exempted it from GST as per serial no. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The transfer of the business involving the under-construction project was deemed to qualify as a going concern and therefore exempt from GST as specified in the notification.

---

---

Issues:
- Interpretation of the applicability of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 on a Business Transfer Agreement involving an under-construction project.

Analysis:
1. The application was made under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 seeking a ruling on whether a Business Transfer Agreement concerning an under-construction project falls under the exemption of GST as per Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

2. The Advance Ruling under GST involves decisions provided by the authority on matters related to the supply of goods or services undertaken by the applicant. The applicant sought clarification on the applicability of the mentioned notification for their specific case.

3. The applicant sought the ruling based on the provisions outlined in Section 97(2) of the Act, which includes aspects like classification of goods/services, applicability of notifications, determination of tax liability, input tax credit, registration requirements, and whether certain activities constitute a supply of goods/services.

4. The authority admitted the application for ruling on the applicability of the exemption notification to the Business Transfer Agreement involving the under-construction project.

5. The applicant, a partnership firm engaged in construction activities, provided detailed submissions regarding the project, the agreement with the buyer, and the nature of the transfer of the under-construction building.

6. The authority examined the specifics of the sale deed dated 24.10.2019, which included details of the assets transferred, rights granted to the buyer, and obligations of the purchaser regarding the under-construction project.

7. The definition of 'business' as per Section 2(17) of the Act was analyzed to determine if the transfer of goods/services for the commencement of business falls within its scope. The concept of 'going concern' was also explained in the context of the transaction.

8. International guidelines regarding the treatment of the transfer of a business as a going concern were referenced to assess the nature of the transaction between the applicant and the buyer.

9. After a comprehensive review of the facts and legal provisions, the authority concluded that the transfer of the business as a going concern to the buyer exempted it from GST as per serial no. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

10. The ruling clarified that the transfer of the business in question, involving the under-construction project, qualifies as a going concern and is exempt from GST as per the specified notification.

This detailed analysis outlines the key aspects considered by the authority in interpreting the applicability of the GST exemption to the Business Transfer Agreement involving the under-construction project as per the relevant legal provisions and definitions.

---