TaxTMI 
TaxTMI 
2023 (4) TMI 959
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.... M/s Airports Authority of India, Civil Airport Road, Sanganer, Jaipur-302011, Rajasthan (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (b), (e) & (g) given as under: (b) Applicability of a notification issued under the provisions of this Act (e) Determination of the liability to pay tax on any goods or services or both. (g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. A. SUBMISSION OF THE APPLICANT: (in brief) • Airports Authority of India (the 'AAI') is the authority created under the Airports Authority of India Act, 1994 (the 'AAI Act'). • 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 purposes of establishing or assisting in the establishment of the airports and for matters connected thereto. • As per Chapter III, Section 12 (1) & (2) of AAI Act, the functions of the AAI....
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....t operation of aircraft to, from and across the air space of India; * establish training institutes and workshops; * Any other activity at the airports and the civil enclaves in the best commercial interests of the Authority including cargo handling, setting up of joint ventures for the discharge of any function assigned to the Authority. • Section 12-A of Airports Authority of India Act (Act) allows AAI, in the public interest or in the interest of better management of airports, make a lease of the premises of an Airport (including building and structures thereon and appertaining thereto) to carry out some of its functions under section 12 as the AAI may deem fit. • in the pursuance of Section 12A of AAI Act, Airports Authority of India has decided to invite 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. Airport has been defined in Article 1 clause 1.1 of the concession agreement. For reference the definition of airport is defined as....
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....ce with the provisions of this Agreement, and, in particular, Schedule A, Schedule B and Schedule C; and (d) Performance and fulfillment of all other obligations of the concessionaire and matters incidental thereto or necessary for the performance of any or all of the obligations of the Concessionaire under this Agreement, in accordance with the provisions of this Agreement, Applicable Laws and Applicable permits. To understand the scope of project it is essential to understand the term project and project assets. The terms project and projects assets is defined in clause 1.1 of Article 1 of the concession agreement. "Project" means the operations, management and development of the Airport in accordance with the provisions of this agreement, and includes all works, services and equipment relating to or in respect of the scope of the project. "Project Assets" means all physical and other assets relating to or forming part of the Site including: (a) rights over the Site in the form of lease, right of Way or otherwise; (b) the Aeronautical Assets and the Non-Aeronautical Assets; (c) tangible assets such as civil works and equipment in....
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....o the applicant calculated as under: (Per Passenger Fee for international Passengers * International Passenger Throughput for that month) + (Per Passenger Fee for Domestic Passengers * Domestic Passenger Throughput for that month) The monthly concession fee is calculated as per Clause 27.1.1 of the concession agreement and monthly concession is subject to revision of per passenger fee as per Clause 27.3 of the concession agreement. * Monthly Concession Fee as consideration for granting lease right of land, building and the immovable assets, as per Clause 10.2.2 of the Concession Agreement. B Interpretation and understanding of applicant on question rose (in Brief) • In the present case as explained above it can be said that by the underlying transaction business of operation, management and development of the airport which is getting carried out by the applicant will be undertaken by the Concessionaire. Thus, in common parlance it can be said that present transaction amount to transfer of business from the applicant to the Concessionaire. • As per the provisions of Section 9 of CGST Act, Central Goods and Service Tax ('CGST'....
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....hey are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of 40[sub-sections (1), (1A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. • On reading the above definition it is clear that the transaction will constitute supply only when the following conditions are satisfied: a. Supply should be of goods or services b. Supply should be made for a consideration c. Supply should be made in the course of furtherance of business d. GST is leviable on supply of goods as well as supply of services. Hence, for levy to sustain, it is important to analyses whether underlying transaction in the present case amounts to supply of goods or services. e. f. In terms of Sec. 2(52) of CGST Act, goods means every kind of movable property other than mone....
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....ely:- Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent) Condition 2 Chapter 99 Services by way of transfer of a going concern, as a whole or an independent part thereof. Nil Nil From the above it is clear that any transfer on a going concern is supply of service and exempted from levy of tax. Alternatively, it can be said that 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 above mentioned notification. At this juncture, it is imperative to analyze whether the transaction in the given context qualifies for the exemption. The exemption essentially lays down the following conditions: Service by way of transfer; The 'transfer' should be of the going concern; Such transfer must be as a whole or an independent part thereof It becomes imperative to understand -the meaning of word 'transfer' in the above exemption entry. In general connotation transfer can be permanent as well as temporary. Union of India vs Dr. Maqsood....
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...., and the Authority shall, indemnify, defend, save and hold harmless the concessionaire against any and all suits, proceedings , actions, demands and claims for any loss, damage, cost and expense of whatever kind and nature under or in connection with any Novated contracts or the Non Novated contracts arising before the COD. Provided that the authority shall not be liable for any individual claim which is less than Rs. 2,00,00,000/- (Rupees two criers),nor shall be aggregate liability of the authority for all claims (excluding related interest and enforcement costs ) under any or all Novated Contracts and/or Non-novated contracts be equal to or exceed Rs 20,00,00,000 (Rupees twenty crore). 16.1.2 All existing security deposits, earnest money deposits, bank guarantees, performance securities or other like instruments for and in respect of the Airport, including those as may have been furnished by the counterparty (iesj to all Novated contracts, shall be released to the counter party by the Authority upon the same being submitted by such counter party to the concessionaire within 180 (one hundred eight} days of COD. 16.2 Transfer of Non-Aeronautical Assets ....
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....c. Bharat Sanchar Nigam Ltd. vs UOI [2006] 3 STT 245(SC): "While dealing as to what constitute a transaction for the transfer of the right to use the goods the Supreme Court laid down certain attributes which must be present in a transaction. One of the attributes was that for the period during which the transferee has such legal right, it has to be the exclusion to the transferor - this is the necessary concomitant of the plain language of the statute - viz. a transfer of the right to use and not merely a licence to use the goods." d. Indus Towers Ltd. vs Deputy Commissioner of Commercial Taxes, Enforcement 1, Bangalore and Others [[2012] 56 VST 369 (Kar)]: "In the context of transfer of right to use goods, the High Court held that what is important is that the legal right transferred to use the goods in favour of a person should not get affected during the period of contract by permitting another person for similar use." From the above, it can be inferred that the transfer in entry 2 of exemption Notification includes temporary transfers also. • Now the second question arises is whether the above transfer is a going concern or not. Going....
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....the date on which all conditions Precedent have been satisfied in accordance with Article 4 and the concessionaire has achieved Financial Close and the concessionaire shall from the COD be entitled to commence the operation and management of the Airport and shall be entitled to demand and collect fee in accordance with the provisions of Article 28. The above clause clearly specifies applicant is not intending to close the operations of the airport and the concessionaire. However, it is intending to transfer the operations of the airport to the Concessionaire for efficient management. There is joint management period, which indicates that both the parties to contract are intending to continue operations of the airport. Joint Management period has been defined in clause 6.5.1 of the Agreement. Even after transfer, Concessionaire will be in position to manage, operate airport and undertake the functions as were undertaken by applicant. Moreover, there will not be any interruption in the operations of the airport on account of the underlying transaction. Hence, it can be said that there is a going concern. Clause 3 of the concession agreement provide....
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....and except as expressly permitted by this Agreement or the Substitution Agreement. In addition, SPV shall undertake development, finance, operation and maintenance of real estate at the Site specified in Schedule A, in accordance with Schedule B and Schedule C, and to use such development for commercial purposes in accordance with terms specified with the right to sub-lease and/ or sub-license any or all parts thereof by way of Project Agreements. Given the above, as per the accounting concept, the airport business by the applicant will be construed as a going concern in absence of intention of liquidation or curtailing the operations. In view of the above explanation it can be concluded that the underlying transaction involves transaction relating to a going concern . 2. The above, clauses of concession agreement reflects, that the Business Arrangement between the AAI and concessionaire has been set in place for 50 years, which is for a foreseeable future spanning 5 decades. The Contract is for transfer of the development, maintenance and management of Jaipur International Airport, Jaipur. In pursuance to AAI Act, the AAI has constructed the air....
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....Neither AAI nor its affiliates will commission a new airport within a 50 km radius of the Airport prior to the expiry often years from COD. This condition is a proof that the scale of business operations undertaken by concessionaire shall continue for a foreseeable future. (c) As per section 12(3)(f) AAI Act, it is the statutory function of the AAI that it may establish and maintain hotels, restaurants and restrooms at or near the airports among its other functions. This function has also been transferred to concessionaire. (d) As per section 12 [3] (r) AAI Act, it is the statutory function of the AAI that it may undertake any other activity at the airports and the civil enclaves in the best commercial interests of the Authority including cargo handling, setting up of joint ventures for the discharge of any function assigned to the Authority. This function has also been transferred to concessionaire. [e] The city side developments activities are statutory functions assigned to AAI vide the AAI Act which has been transferred to concessionaire and this view cannot be short sighted. The contract is a business arrangement wherein the statutory functions of AA....
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....uch transfer of business as a whole will comprise comprehensive transfer of immovable property, goods and transfer of unexecuted orders, employees, goodwill etc. In the instant case, the Applicant has not furnished any documentary evidence to establish that the Applicant is a going concern except their admission that its an ongoing business and the transaction proposes to transfer all the assets and liabilities to the new owner. It implies that the business will continue in the new hands with regularity and a nature of permanency." ii. M/s. Innovative textiles ltd (Uttarakhand AAR), In another advance ruling decision, internationally accepted guidelines were discussed [issued by His Majesty's Revenue & Customs (HRMC)] to treat the transfer of business as a going concern as under: o The assets must be sold as part of a 'business' as a 'Going concern'. o The purchaser intends to use the assets to carry on the same kind of business as the seller o Where only part of a business is sold it must be capable of separate operation o There must not be a series of immediately consecutive transfers. • Articl....
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....s a supply of goods nor supply of services. "Sale of land and subject to clause (b) of paragraph 5 of schedule II, sale of building" Hence sale of land is neither a supply of goods nor service and hence not covered under the ambit of GST. • Land though explicitly not defined in the CGST Act, 2017 viz-a-viz SGST Act, 2017 reference could be drawn from various other statutes as under: Section 3(a) of Land Acquisition Act, 1894 The expression 'land' includes benefits that arise out of land and things attached to earth or permanently fastened to anything attached to the earth Section 3(4) of Bombay Land Revenue Code, 1879 'land' includes benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth and also shares in or charges on the revenue or rent of village or other defined portions of territory Section 3(26) of General Clause Act, 1897 'Immovable property' shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth • The assess....
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....oods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. The definitions are referred to simply to reinforce the conclusion that the CIDCO is a person and in the course or in furtherance of its business, it disposes of lands by leasing them out for a consideration styled as one-time premium. Therefore, if one refers to Schedule II, section 7, then, Item No. 2 styled as land and building and any lease, tenancy, licence to occupy land is a supply of service. Any lease or letting out of a building, including commercial, industrial or residential complex for business, either wholly or partly is a supply of service. It is settled law that such provisions in a taxing statute would have to be read together and harmoniously in order to understand the nature of the levy, the object and purpose of its imposition. No activity of the nature mentioned in the inclusive provision can thus be left out of the net of the tax. Once this law, in terms of the substantive provisions and the Schedule, treats the activity as supply of goods or supply of services,....
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....e invoice raised by the applicant on the concessionaire with regard to the emoluments payable to the Select Employees. Applicant reproduces herewith the relevant definition for better understanding of clause 6.5 Applicant reproduces herewith the relevant definition for better understanding of clause 6.5 (i) Select Employees Cost shall mean those employees of the Authority as set forth in Schedule S [of the rank of assistant general manager and below) who are posted at the Airport by the authority and shall be deployed at the Airport for the duration of the Joint Management period and Deemed Deputation period (ii) Joint Management Period shall mean the period commencing from the COD and ending on the date which is l(one) calendar year after the COD (iii) Deemed Deputation Period shall mean the period commencing from the expiry of the Joint Management period and ending on the date which is 2 (two) calendar years therefrom 46.1 According to the clause 6.5.3 of the concession agreement the Senior Personnel shall remain deputed at the airport for a period not exceeding 3 months from the COD. After the expiry of 3 months the senior pe....
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.... held as under: "The subject issue hinges on whether business arrangement between AAI and SPV is a transfer of going concern or otherwise. According to Accounting Standard-I issued by ICAI that a fundamental accounting assumption is that of 'Going Concern' according to which 'the enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. The transfer of a going concern means transfer of a running business which is capable of being carried on by the transferee as an independent business in continuity without any hindrance for a foreseeable period. Such transfer of business will comprise transfer of assets for running the business. Such transfer as going concern may involve transfer of employees as requisite to carry on the business without interruption. In effect, it implies that the business will continue in the new hands with regularity and a nature of permanency. [Para 22]" Findings on the issue if subject contract entered between AAI and SPV merits transfer of going concern or otherwise are: i. Foreseeable Future The subject business arrangement has been set in place for 50 years, wh....
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....terms and conditions mutually agreed between SPV and the accepting employees. v. Steps taken for Business Continuity There is a condition of the said contract, that neither AAI nor its affiliates shall commission a new airport within a 50 km radius of the subject Airport prior to expiry of ten years from COD. This condition is a proof that the scale of business operations undertaken by SPV shall continue for a foreseeable future. The contract is self-contained to ensure that Airport business continues without hinderances. [Para 23] Thus, the subject contract entered between AAI and SPV is for transfer of going concern of an independent part of the business carried out by AAI with respect to the operations, development and maintenance of the subject Airport. [Para 23.1] Further, subject business arrangement is pronounced as transfer of going on concern, though there is no sale, as transfer of going on concern is not limited to sale [slump sale/item wise sale] but such transfer may be witnessed in circumstances such as sale/gift/lease/leave or license/hire/in any other manner. [Para 23.2] It is held that subject business arrangeme....
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.... lease, leave and license, hire or in any other manner whatsoever. The wording used in the Notification No. 12/2017 is transfer of business and not sale of business. Further, it is held that transfer of business may be as a whole or independent part. [Para 24.10] Thus, subject business arrangement is 'transfer of business of an independent part with respect to SVP International Airport' by AAI to SPV for a period of fifty years which is a foreseeable future. AAI has not ceased to be a registered person under GST after this transfer, but continues its other operations. Therefore, subject supply is Transfer of going concern as an independent part with respect to the said Airport. [Para 24.11] It is held that there are payments to be made to the AAI by SPV, as specified in the subject contract. This business arrangement has been entered with consideration involved as per the terms and conditions of the contract. The consideration may be one time or in instalments or as per the agreed terms between AAI and SPV. In this context, the payment made by the SPV to AAI includes the estimated deemed regulatory asset based, payment made by SPV towards the estimated initial non-....
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.... of the contract. The consideration may be as per the terms and conditions of the contract and there is no restriction on consideration being upfront/one time/in instalments/as per agreed terms of the contract. Concession fees are paid to SPV to AAI during the concession period, calculated on a formula based on passenger footfall. Concession fees payable by SPV to AAI are not to be confused with the user fees payable by the users to SPV. AAI had not received any concession fees during the inception period and that all the concession fees were received by it after the Commencement of Operations (CoD). [Para 27.1] Thus, the subject supply of 'Transfer of going concern service' is supply under section 7 The subject supply is 'transfer of going concern service'. Schedule 11(4) to the 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 instant case, there arises no need to examine Schedule II (4). The subject supply is covered at Entry No. 2 of Notification No. 12/2017 - Central Tax (Rate), dated 28-6-2017.Concession fee is a part of....
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.... 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 M/s. Airport Authority of India to the M/s. Adani Jaipur 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 Jaipur International Airport Limited to M/s. Airports Authority of India be treated as consideration for transfer of business? 7. Whether GST is applicable on Monthly/Annual concession fees charged by the Applicant on the M/s. Adani Jaipur International Airport Limited? If Yes, What rate? 8. Whether GST is leviable on the invoice raised by the Applicant for reimbursement of the salary/ staff cost on M/s. Adani Jaipur 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 Applicant from M/s. Adani Jaipur International Airport Limited? If yes, at what rate? 10. Whether any reversal is required in accordance with section ....
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....ing concern and covered in clause 4 of schedule II of CGST Act viz-a-viz RSGST? Ans.2. Yes, according to the Schedule II of Central Goods and Services Act 2017 -Activities to be treated as supply goods or supply of services where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets. Whether or not for a consideration, such transfer or disposal is a supply by this person; where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person lot use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services; where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course of furtherance of his business immediately he ceases to be taxable person, unless (i) business is transferred as going concern to a....
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....rports Authority of India is treated as consideration for transfer of business? Q. 7. Whether GST is applicable on Monthly/Annual concession fees charged by the Applicant on the M/s. Adani Jaipur International Airport Limited? If Yes, What rate? Ans. 7. Yes, 18% Q. 8. Whether GST is leviable on the invoice raised by the Applicant for reimbursement of the salary/ staff cost on M/s. Adani Jaipur Internationa] Airport Limited? If yes at what rate? Ans. 8. Yes, 18% Q.9. Whether GST is applicable on the reimbursement claimed of Municipal tax, Property Tax and Water Charges by the Applicant from M/s. Adani Jaipur International Airport Limited? If yes at what rate ? Ans. 9. No. Q. 10. Whether any reversal is required in accordance with section 17 (2) / (3) of CGST Act viz-a-viz RGST Act ? Ans. 10. Yes, if any credit taken regarding point no 3 & 9. F. FINDINGS, ANALYSIS & CONCLUSION: At the outset we would like to make it clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless....
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.... in a phased manner, on the Site and as per the requirements broadly set forth in Schedule A and Schedule B together-with provision of respective project Facilities as specified in schedule B, and in conformity with the specification and standards set forth in Schedule C, and in accordance with the Applicable laws and Applicable permits; (b) operations, maintenance and management of the Airport in accordance with the provisions of this Agreement, Applicable Laws and Applicable permits (c) development, operation and maintenance of city Side, in accordance with the provisions of this Agreement, and, in particular, Schedule A, Schedule B and Schedule C; and (d) performance and fulfillment of all other obligations of the concessionaire and matters incidental thereto or necessary for the performance of any or all of the obligations of the Concessionaire under this Agreement, in accordance with the provisions of this Agreement, Applicable Laws and Applicable permits. (e) Concessionaire agrees to pay the Applicant (i.e. Airports Authority of India) following sum as consideration for transfer:- * Rs. 2,53,00,00,000/- towards Estimated Deemed Ini....
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.... business module executed through agreement between M/s. AAI and M/s. ADIAL is transfer of business or not. 3.2) So, we would like to discuss the matter whether the transfer of business as claimed by applicant falls under the ambit of Supply under GST and would be treated as Supply u/s. 7 of the Central Goods and Service Tax Act, 2017 (CGST ) viz-a-viz Rajasthan State Goods and Service Tax Act, 2017. As per Sec. 7(1) of CGST Act, 2017, supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made, for a consideration by a person in the course or furtherance of business; As the definition of supply covers transfer, the activity of transfer of business is covered under the definition of supply. Further, as per Sec. 2(17) (d) of the CGST Act, 2017, business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to subclause (a); Page 25 of 32 ....
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...., 2017. From the various available definitions and various ruling pronounced in various judgments i.e. Indor Rama Textile Limited 1 (2013), of Delhi High Court, Allahabad Bank v ARC Holdink [2] (2000) of Supreme Court, AE International Aero Engines AG and Ors. vs. United Breweries (Holdings) Limited and Ors ILR 2017 Karnataka 2225 of Karnataka High Court, We observe that for 'transfer of business of going concern, any agreement must have some contents - (a) business should be continued for a foreseeable period, (b) There is no intention to liquidate the business and there should be continuity of the same business by the transferee as was being carried on by the transferor, (c) Business activity constituted by transfer of assets and liabilities should have capability to run independently. 4.2) So, it is obvious, to merit as to whether business arrangement entered vide Concession Agreement dated 16.01.2021 is transfer of Going concern or otherwise. 4.3) Accounting Standard-I issued by ICAI that a fundamental accounting assumption is that of 'Going Concern' according to which the enterprise is normally viewed as a going concern, that is,....
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....le laws and Applicable Permits; [c] development, operation and maintenance of City side (d) performance and fulfillment of all other obligation of the SPV and matters incidental thereto or necessary for the performance of any or all of the obligations of the SPV under this contract. 4.6] We observes after going through the concession letter dated 16.01.2021, that M/s AAI has transferred the business for operation, management and development of the Jaipur International Airport, Jaipur to SPV (AJIA) for a period of 50 years which establishes that there is continuance of business for the foreseeable future. 4.6] We also find many provisions in the agreement in respect of business continuity such as- [a] The applicant has, submitted that all existing contracts entered by AAI have been novated and the requisite insurance has been taken by SPV. (b) Neither AAI nor its affiliates shall commission a new airport within a 50 km radius of the subject Airport prior to the expiry often years from COD. (c) The statutory function of the AAI to establish and maintain hotels, restaurants and restrooms at or near the airports as per Section 12(3](f] AA....
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....I or any third party shall continue to vest in AAI at all times. 4.11) we would like to discuss that if liabilities have not been transferred, even if it compromises the definition of out going concern. 4.12) we observe that it is not necessary for an entity to shift its whole of assets or liability. Here in this case AAI have vast assets but they has transferred Jaipur International Airport through concessional agreement dated 16.01.2021 for the sustainability and continuity of business after transfer of business to SPV. Thus we can reach on conclusion that if any enterprise is having the intention to continue the business even if all assets or liability are not transferred and if only those assets which are essential to continue the business are transferred as an whole or independent part than, it may be treated as going concern. 4.13) we find that the SPV shall bear the Select employees costs, as set forth in Schedule 'S' to the said Contract. Further, as per Article 6.5.6 of the Agreement, during the joint management period, the SPV shall make Employment Offers to a minimum of 60% of select employees and SPV shall be the new employer of the Accepting employees ....
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....on. 5.1) We find that vide Concession Agreement dated 16.01.2021, AAI has only transferred its Jaipur Airport business to the M/s AJAIL (SPV) but its other business are not transferred AAI through this Concession Agreement, hence AIA has not ceased to be a Taxable person and for other business the AAI is a taxable person and registered under GST. 5.2) We further note that Schedule II (4) CGST Act stipulates whether the transactions with respect to 'Transfer of Business Assets' to be treated as supply of Goods or supply of services. Having gone through the subject Contract, we find the subject business arrangement is 'transfer of going concern'. As such, we find no merit to vivisect the subject Contract and examine the treatment of aeronautical assets/ non aeronautical assets/ other business assets in the Contract entered between AAI and SPV. 5.3) Thus, we observes that the transfer of business by Airports Authority of India to M/s AJAIL (SPV) is transfer of a 'going concern' and the same is not covered in clause 4 of schedule II of CGST Act. 6.) Now we will examine as to whether the transfer of business by M/s. Airports Authority of India to M/s.....
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.... next question of the applicant is as to whether the concession fees paid by M/s. Adani Jaipur International Airport Limited to M/s. Airports Authority of India be treated as consideration for transfer of business? 9.1) We observes that Consideration for Services by way of transfer of a going concern may be as per the terms and conditions of the Contract and there is no restriction on consideration being upfront/ one time/ in installments. Concession fees is payable by SPV to AAI during the concession period, calculated on a formula based on passenger footfall. The same is part of consideration for transfer of business assets. 10) The next question of the applicant is as to whether GST is applicable on Monthly/Annual concession fees charged by the Applicant on the M/s. Adani Jaipur International Airport Limited? If yes at what rate? 10.1) The monthly/annual concession fees is also part of consideration for Services by way of transfer of a going concern and exempted from GST vide entry no. 2 of Notification No. 12/2017-CT(r) dated 28.06.2017. 11 )The next question is Whether GST is leviable on the invoice raised by the Applicant for reimbursement of the salary/ staff cos....
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....ing the new entity, they become a part of the transfer of business as a going concern. Moreover only upon accepting the employment offers, they cease to be employees of the AAI and those who do not accept the offer will not be the part of the transfer of going concern. Thus it is ample clear reimbursement of the salary/ staff cost will attract GST as it don't form any part of services by transfer of outgoing concern. 11.5) In light of declarations, it is clear that the employees of AAI may opt or may not opt for employment under the SPV and there may be circumstances in which they do not receive employment offers or they continue their services with the AAI and in this condition they will be redeployed by the AAI and removed from the airport which will be managed and operated by the SPV. Thus there is no case for exemption on the reimbursement of emolument of employees to the AAI as services of manpower supply is provided by one distinct entity to another distinct entity where transfer of business as a going concern is not a precondition nor this supply of manpower services is a corollary to the agreement for transfer by outgoing concern for the operations management and dev....