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of <h1>Airport business transfer to private operator exempt from GST as going concern under Entry 2 Notification 12/2017-CT(R)</h1> <h3>In Re: M/s. Airports Authority of India,</h3> In Re: M/s. Airports Authority of India, - 2023 (76) G. S. T. L. 391 (A. A. R. - GST - Raj.) Issues Involved:1. Whether the transfer of business by the Airport Authority of India (AAI) to M/s. Adani Jaipur International Airport Limited (AJIAL) qualifies as a 'Supply' under Section 7 of the CGST Act, 2017.2. Whether the transfer of business is treated as a supply of a going concern and covered under clause 4 of Schedule II of the CGST Act.3. Whether the transfer of business is covered under Entry No. 2 of the exemption notification No. 12/2017 - Central Tax (Rate) dated 28-06-2017.4. GST implications on the transfer of existing assets, aeronautical assets, non-aeronautical assets, and capital work in progress.5. Classification of the transfer of assets as services.6. Treatment of concession fees paid by AJIAL to AAI.7. GST applicability on monthly/annual concession fees.8. GST applicability on reimbursement of salary/staff costs.9. GST applicability on reimbursement of municipal tax, property tax, and water charges.10. Reversal requirements under Section 17(2)/(3) of the CGST Act.Summary:1. Transfer of Business as Supply:The Authority ruled that the transfer of business by AAI to AJIAL qualifies as 'Supply' under Section 7 of the CGST Act, 2017. The definition of supply includes transfer, and the activity of transferring business fits within this definition. Business, as defined under Section 2(17)(d) of the CGST Act, includes the supply or acquisition of goods and services in connection with the commencement or closure of business.2. Supply as a Going Concern:The transfer of business is treated as a supply of a going concern and is not covered under clause 4 of Schedule II of the CGST Act. The business arrangement between AAI and AJIAL meets the criteria of a going concern, which includes the continuity of business for a foreseeable period, no intention to liquidate, and the capability to run independently.3. Exemption under Notification No. 12/2017:The transfer of business by AAI to AJIAL is covered under Entry No. 2 of the exemption notification No. 12/2017 - Central Tax (Rate) dated 28-06-2017. This entry exempts services by way of transfer of a going concern, as a whole or an independent part thereof.4. GST on Transfer of Assets:Since the transfer of business qualifies as a transfer of a going concern, there is no need to separately address the GST implications on the transfer of existing assets, aeronautical assets, non-aeronautical assets, and capital work in progress.5. Classification of Transfer of Assets:The classification of the transfer of assets as services is not required as the transfer of business as a going concern is already covered under the exemption notification.6. Concession Fees as Consideration:The concession fees paid by AJIAL to AAI are treated as consideration for the transfer of business.7. GST on Concession Fees:The monthly/annual concession fees are part of the consideration for the transfer of a going concern and are exempt from GST under Entry No. 2 of Notification No. 12/2017-CT(R) dated 28-06-2017.8. GST on Reimbursement of Salary/Staff Costs:GST is leviable on the invoice raised by AAI for reimbursement of salary/staff costs to AJIAL at the rate of 18% (9% CGST and 9% SGST). The reimbursement of emoluments to AAI does not form part of the transfer of business as a going concern and is considered a supply of manpower services.9. GST on Reimbursement of Municipal Tax, Property Tax, and Water Charges:The reimbursement of municipal tax, property tax, and water charges falls under the supply of transfer of a going concern service and is exempt from GST.10. Reversal of ITC:AAI is required to reverse the ITC proportionate to the exempt supply of services by way of transfer of a going concern as per Section 17(2)/(3) of the CGST Act.Ruling:1. The transfer of business is a supply under Section 7 of the CGST Act.2. The transfer is a supply of a going concern and not covered under clause 4 of Schedule II of the CGST Act.3. The transfer is covered under Entry No. 2 of Notification No. 12/2017-CT(R).4. No separate ruling required for GST on transfer of assets.5. No separate ruling required for classification of transfer of assets.6. Concession fees are part of the consideration for the transfer of business.7. Monthly/annual concession fees are exempt from GST.8. GST at 18% is applicable on reimbursement of salary/staff costs.9. No GST on reimbursement of municipal tax, property tax, and water charges.10. Reversal of ITC is required as per Section 17(2)/(3) of the CGST Act.
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