9911796707
TMI Blog2023 (4) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 are: * To manage the airports, the civil enclaves and the aeronautical communication statio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 under: "Airport" means Jaipur International Airport located at the Site, and includes civil, mechanical and electrical works, the Terminal Building, Cargo Facilities, Runway and all Project Assets necessary for and associated with operation and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 including foundations, drainage works, electrical systems, communication systems and administrative offices; (d) Project Facilities situated on the Site; (e) buildings and immovable fixtures or structures forming part of City Side Development; (f) all rights of the Concessionaire under the Project Agreements; (g) financial assets, such as receivables, secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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') is leviable on intra-state supplies of goods or services. Similarly, State Goods and Service Tax ('SGST'), is also leviable on intra-state supplies of goods and services. * As per Section 5 of the IGST Act, which is the charging section, integrated Goods and Services Tax ('IGST') shall be levied on all inter-state supplies of goods or services or both. * Thus, it is clear that GST is leviable on supply of goods or services. Thus, it is imperative to analyses whether the transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing 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 money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply g. h. Therefore, to be called as goods, it has to be movable property. As business cannot be said to be movable, transfer of business cannot be said to be a transfer of goods. Subsequently the next question arises is whether the transfer of business will come under the purview of definition of services. Section 2 (102) of the CGST Act defines 'services' as: 'services' means anything other than goods, money and securities but includes activities relating to the use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entially 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 Ahmed [AIR 1963 Bom 110, 114], wherein, the Court has held that: "the work 'transfer' is a larger word and the word 'sale' is a specific word. A transfer may be by means of a lease, mortgage or sale or in any other mode." * It would be worthwhile to note that whilst the definition of supply includes sale but the exemption notification does not refer to sale of going concern to be exempted. It uses the word 'transfer'. Given that there is no definition of 'transfer', two views are possible. The first view is that it could mean an outright sale. The second view could be that it may not necessarily mean outright sale because if the intention of the legislature was to exempt sale of going concern, it could have used the term sale. However, it has used the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, 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 Subject to clause 6.3, the concessionaire shall be deemed to have assumed control of all Non- Aeronautical Assets on the COD 16.3 Transfer of Aeronautical Assets The concessionaire shall be deemed to have assumed control of all, Aeronautical Assets and Terminal Building on the COD. Further, general meaning of the word 'transfer' as well as its definition in various Acts suggests that it is not restricted to permanent transfer. The various definitions of the term transfer are summarized below for ready reference: Arms Act. 1959 Section 2(lXk) Transfer with its grammatical variations and cognate expressions, includes letting on hire, lending, giving and parting with possession. Foreign Exchange Management Act 1999 Section 2(za) Transfer includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f exemption Notification includes temporary transfers also. * Now the second question arises is whether the above transfer is a going concern or not. Going Concern is not defined under CGST Act. However, going concern is an accounting principle which indicates that business would continue, and management is not intending to liquidate or stop business for near future. * As per Accounting Standard 1, issued by the Institute of Chartered Accountants of India, the enterprise is normally viewed as a Going Concern, that is, as continuing in operation for the foreseeable future. In terms of financial transaction 'going concern' has the meaning that at the point in time to which the description applies, the business is live or operating and has all parts and features necessary to keep it in operation. Transfer of a going concern means transfer of a running business which is capable of being carried on by the purchaser as an independent business. Such transfer of business as a whole will comprise comprehensive transfer of immovable property, goods and transfer of unexecuted orders, employees, goodwill etc. It implies that the business will continue in the new hands with regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id that there is a going concern. Clause 3 of the concession agreement provides that the Company would be given a right to carry on the airport business for a period of 50 years. On completion of the tenure of the concession period, the assets and liabilities would revert back to applicant. This would also happen on premature termination due to breach of concession agreement. Thus, it is the intention of the contract that the business so transferred is intended to be carried on with regularity and with the nature of permanency during the concession period. Clause 3.1.1 and 3.1.2 of the concession agreement is reproduced hereunder; Subject to and in accordance with the provisions of this agreement, Applicable laws and the Applicable permits, the authority hereby grants to the concessionaire, the concession set forth herein including the exclusive right, lease and authority to operate, manage and develop the Airport (Concession) for the period of 50 (fifty) years commencing from the COD, and the concessionaire hereby accepts the Concession and agrees to implement the project subject to and in accordance with the terms and conditions set forth herein. 3.1.2. Subject to and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been operating it under and in accordance with the AAI Act. The concessionaire has taken insurance, novated all the existing agreements as mentioned in Schedule V, so as to maintain effective running of operations of the airport. The concessionaire has entered into Memorandum of Understanding with the Government of India as per Schedule R to the said Contract. On plain reading of the contract, it is forthcoming that there are various standards specified in the Contract to ensure that the operations, development and maintenance of the said Airport is undertaken in pursuance with the AAI Act by the concessionaire. The business arrangement between the AAI and concessionaire satisfies the concept for foreseeable future. Hence it is clear that the underlying transaction involves transaction relating to a going concern for a foreseeable future. * Now the third question arises is whether the transfer is a whole or an independent part thereof. In the present case the applicant is not transferring the entire business, however the applicant is transferring its independent unit i.e. Jaipur International airport. Hence, it becomes necessary to determine whether operation of the airpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration for the same has been charged on concessionaire. (f) The Article 2 of the contract wherein the scope of the Project is detailed, which includes the operation, management and development of the airport. The 'airport' also includes all project assets necessary for and associated with the operation and expansion of the airport. The project assets are physical and other assets relating to or forming part of the site including the rights over the site in the form of lease, right of way or otherwise; the aeronautical assets and non-aeronautical assets; tangible assets such as civil works and equipment including foundations, drainage works, electrical systems, communication systems and administrative office; project facilities situated on the site; buildings and immovable fixtures or structures forming part of city side development; all rights of the concessionaire under the project agreements; financial assets such as receivables, security deposits , all negotiable instruments etc; insurance proceeds; applicable permits and authorizations relating to or in respect of the airport. The Contract is self-contained to ensure that Airport business continues without hindran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cession period, the assets and liabilities would revert back to AAI. This would also happen on premature termination due to breach of concession agreement. Thus, it is the intention of the contract that the business so transferred is intended to be carried on with regularity and with the nature of permanency during the concession period. * Attention at this stage is also invited to the international jurisprudence in this regard. a. Hon'ble Constitutional Court of South Africa in the case of Aviation Union of South Africa and Another Vs. South African Airways [Pty] Ltd and Others MANU/SACC/OO3O/2011, while interpreting the provision o, Section 197 of Labour Relations Act, it was held that transfer of operations of airport from first person to second and subsequently from second person to first amounts to transfer of business by one person to another as a going concern. b. In case of Robinson Family Limited vs. the Commissioners for Her Majesty's Revenue and Customs [2012] UKFTT 360 GC), Hon'ble United Kingdom First Tier Tribunal has held that transfer of property by way of lease for the letting business amounts to transfer of a going concern. * Therefore, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 2009 SC 2122) has observed that 'Sale' is defined as a transfer of ownership for a price. In a sale there is an absolute transfer of all rights in the properties sold. No rights are left with the transferor. Hon'ble Bombay High Court in the case of Provident investment Co. Ltd vs Commissioner of income tax - AIR 1954 Bom 95 observed that a sale or transfer presupposes the existence of the property which is sold or transferred. It presupposes the transfer from one person to another of the right in the property. * Attention is drawn to the Entry 49 of the List II of Seventh Schedule of the Constitution of India, which empowers only the state government to levy any tax on land which is produced hereunder: "49. Taxes on Land and Buildings" * Applicant is of the view that a long term lease for a period exceeding 30 years tantamount to Sale of the immovable property since the lessor is deprived of the right to use, enjoy and possess the property once the said lease has been granted. * Further attention is also drawn to Article 30 of the Gujarat Stamp Duty Act wherein the aforesaid transaction is treated as conveyance. * Applicant draws your attention to the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly planning and development will be of no assistance in the sense while developing a new township, the objective of the planning authority is not to earn money, but to develop the area so that the purpose of setting up a township is achieved by more people wanting to live in the area in lieu of the various amenities provided in the area. The CIDCO is one such authority. It is entirely for the legislature, therefore, to exercise the powers conferred by sub-section (2) of section 7 of the GST Act and issue the requisite notification. Absent that notification, merely going by the status of the CIDCO, it cannot be held that the lease premium would not attract or invite the liability to pay tax in terms of the GST Act. * The applicant submits that if the monthly/ annual fees are considered to be consideration for transfer of business over and above the initial/ one time payments then the exemption shall be available and thus Navi Mumbai Builder's Association v. Union of India is distinguishable. * The applicant submits that it receives reimbursement of property tax, water tax, electricity etc payable from the concessionaire. The applicant submits that the said reimbursements a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAI and will be redeployed after the completion of Deemed Deputation period. 46.4 After the expiry of Deemed Deputation period if the Accepting employees are less than 60% of the Select employees which is called Deficit Employees . Deficit Employees Cost shall be pass through in determination of aeronautical charges and shall be payable until retirement or other separation from Authority's services of the Deficit Employees whichever is earlier. * The deficit employees cost, if any, as raised upon by the concessionaire on the applicant is pass through i.e. only the liabilities payable by the applicant will be recovered from the concessionaire and are not in nature of any damages recovered. * Further the select employees had the option to choose whether to join the concessionaire or not. However, the applicant was contractually obligated to pay the salaries and other emoluments to the select employees hired for the purpose of the operations of Jaipur airport. * The applicant has merely passed over its liability arisen out of the employment contracts of the select employees to the concessionaire. And thus this cannot be considered as any damages levied upon the concessiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there are various standards specified in the contract to ensure that the operations, development and maintenance of the said Airport is undertaken in pursuance with the AAI Act by the SPV. It is held that this business arrangement satisfies the concept for foreseeable future. ii. Transfer of Assets and Liabilities In pursuance to this contract, all the existing security deposits, earnest money deposits, bank guarantees, performance securities or other like instruments for and in respect of the airport shall be released to the counter party by AAI upon the same being submitted by such counter party to the SPV within 180 days of CoD. Further all the liabilities arising as a result thereof of this contract shall be deemed to be the liabilities of the SPV. Further, it is opined that it is not essential to transfer all assets and liabilities for a transaction to qualify for a transfer of business. That is to say, that even if some assets are retained by the AAI and the SPV after such transfer carries out subject business activities without any obstruction, it shall still qualify to be a transfer of a business. iii. Legal backing for Transfer of functions to AAI to SPV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Goods for it is not a movable property and thereby transfer of business cannot be supply of goods. [Para 24.1] Prima facie from reading the section 7 [supply definition], section 2(52] [goods definition], section 2[102) [services definition], section 2[17] (business definition] CGST Act, it is not directly forthcoming if business is a service, consequently making supply of business a supply of service. For illustration, the meaning of section 2(17](d] prima facie is not forthcoming, if the word 'Business' is substituted for the word 'service'. [Para 24.4] From the construction of the wordings in the sections 18(3], 22(3] and 85(1]; Schedule 11(4] of CGST Act and the rule 41(1] CGST Rules, it is found that 'transfer of business' is more of an event in pursuance to a business arrangement. [Para 24.6] In exercise of powers conferred under section 11(1], the Central Government has issued Notification No. 12/2017 - Central Tax [Rate], dated 28-6-2017, wherein at SI. No. 2 of Notification No. 12/2017 - Central Tax [Rate], dated 28-6-2017 reads the description of service as 'services by way of transfer of a going concern, as a whole or an independent pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch business the AAI is a taxable person and registered under GST. [Para 26.1] Schedule 11(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. There is no merit to draw any parallel between the 'transfer of business' which is the subject matter and 'transfer of business assets' as mentioned in Schedule 11(4) to the CGST Act. AAI has not ceased to be a taxable person. [Para 26.2] On detailed reading of the subject contract and it is found that the subject business arrangement is 'transfer of going concern service'. Thereby, no merit is found 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. The substance of the contract compels one under GST scheme of law interpretation, to classify the subject business arrangement as 'transfer of going concern service'. [Para 26.3] On transferring the said Airport business to SPV, the SPV will cause to continue to successfully operate said business for a foreseeable future. Thus the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance to the terms of subject contract dated 14-2-2020 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/reimbursement of cost is exempt from GST. [Para 29]. No appeal has been preferred against the aforesaid order before appellate authority of advance ruling neither by Centre nor State. * In light of the aforesaid facts of the case, judicial pronouncements and relying upon the decision of Gujarat AAR, the Applicant is of the view that the said transaction is exempted by the Entry No. 2 of the exemption notification No 12/2017 - Central Tax (Rate) dated 28-06-2017. C. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT:- 1. Whether the transfer of business by the Airport Authority of India to the M/s. Adani Jaipur International Airport Limited 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 (RSGST) ? 2. Whether the transfer of business by Airports Authority of India to M/s. Adani Jaipur International Airport Limited is treated as supply as going concern and covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2017: Scope of Supply (chapter iii levy and collection of tax), For the purposes of this Act, the expression 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: (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration Explanation - For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another (b) import of services for a consideration whether or not in the course or furtherance of business, and (c) the activities specified in Schedule I, made or agreed to be made without a consideration, so, according to Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub- section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table namely:- 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 Q.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?. Ans. 4. No answer is given. Q.5. Whether the aforesaid transfer of asset is treated as services and the classification for the same? Ans. 5. No. the aforesaid transfer of asset is to be treated as supply of goods. Q.6. Whether the concession fees paid by M/s. Adani Jaipur International Airport Limited to M/s. Airports Authority of India be treated as consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r undertaking the operations, management and development of airport of the applicant 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 your reference the definition of airport is defined as under: "Airport" means Jaipur International Airport located at the Site, and includes civil, mechanical and electrical works, the Terminal Building, Cargo Facilities, Runway and all Project Assets necessary for and associated with operation and expansion of the Airport; 2.2) the applicant accepted the bid of Adani Enterprise Limited and issued letter of Award dated 01.09.2020 which required Adani Enterprise Limited to execute the concession agreement through a special purpose vehicle In accordance with and subject to the provisions of the Agreement and applicable laws the applicant has granted Concessionaire the exclusive right, lease and authority to operate, manage and develop the Airport for a period of 50 years commencing from the Commercial Operation Date (a) design, development, financing, constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the concessionaire shall pay the amount as indicated in invoice raised by applicant towards emoluments of the select employees as per clause 6.5.5 of the Concession Agreement * Monthly concession Fee during the concession period shall be paid to 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. 3) Now we would like to discuss on questions raised before AAR one by one. 3.1) We observes that applicant has understood by themselves that they have transferred the business to M/s. Adani Jaipur International Airport Limited. The applicant has not put question before appellate authority that whether the business module executed through agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service, Section 2(102) CGST Act, which defines Service as follows: services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. We observe Business' may be covered under the umbrella of the definition of Service, in accordance to Section 2(102) CGST Act and the activity of transfer of business is in the nature of supply. 4) Next we proceed to examine as to whether the transfer of business by Airports Authority of India to M/s. Adani Jaipur International Airport Limited is treated as supply as going concern and covered in clause 4 of schedule II of CGST Act viz-a-viz RGST. 4.1) The applicant claimed that they have transfer the business to M/s. Adani Jaipur International Airport Limited. Now we would like to examine whether the transaction falls under the supply of going concern. The term 'going concern' is not defined in CGST Act, 2017. From the various available definitions and various ruling pronounced in various judgments i.e. Indor R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived from the bidders and receipt of approval of GOI, the applicant accepted the bid of M/s Adani Enterprise Limited and issued letter of Award dated 01.09.2020 which required M/s Adani Enterprise Limited to execute the concession agreement through a special purpose vehicle. Adani Enterprise Limited has promoted and incorporated a special purpose vehicle company as Adani Jaipur International Airport Limited (hereinafter referred as SPV]. A Concession Agreement dated 16.01.2021 has been entered between Airports Authority of India and Adani Jaipur International Airport Limited for Operations, Management and Development of Jaipur International Airport, Jaipur. 4.5] As per Article 2 of the agreement, the scope of the project shall mean the operations, management and development of the Airport covering- (a] design, development, financing, construction, up-gradation and expansion of the Airport in a phased manner (b) operations, maintenance and management of the Airport in accordance with the provisions of the Agreement, Applicable laws and Applicable Permits; [c] development, operation and maintenance of City side (d) performance and fulfillment of all other obligation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st money deposits, bank guarantees, performance securities or other like instruments for and in respect of the airport shall be released to the counter party by AAI upon the same being submitted by such counter party to the SPV within 180 days of commercial operation date. Further we find that all the liabilities arising as a result thereof of this contract shall be deemed to be the liabilities of the SPV. 4.9] Furthermore, we are of the opinion that it is not essential to transfer all assets and liabilities against a transaction to qualify for a 'transfer of business. That is to say that even if some assets are retained by the AAI, and the SPV after such takeover carries out subject business activities without any obstruction then it shall qualify to be a transfer of a business. 4.10) We observe that as per Article 16.1.1 of the Agreement, all the liabilities incurred by the AAI prior to commercial operation date including any debt obligations and payments to AAI 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 obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person; (b) 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 for 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; (c) 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 or furtherance of his business immediately before he ceases to be a taxable person, unless- (i) the business is transferred as a going concern to another person; or (ii) the business is carried on by a personal representative who is deemed to be a taxable person. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Notification, reads the description of service as 'Services by way of transfer of a going concern, as a whole or an independent part thereof'. We have already discussed that transfer of business is service thus, 'services by way of transfer of a going concern,' is 'Transfer of a going concern service'. 6.3) Now taking our cue from the said Sr. no. 2 of Notification 12/2017 which has been issued in exercise of powers granted by Section 11(1) CGST Act, we hold that business is service and transfer of a going concern is supply of service. 7.) We observe that there is no need to answer the next question, because answer of previous question is not negative. 8.) The next question has already discussed in answer of question no 2 & 3. The transfer of asset is part of transfer of going concern as such ruling is not required on the said question. 9.) The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rves that points of agreements that payment of salary or emoluments of staff is onus of applicant i.e. AAI. The M/s. Adani Jaipur International Airport Limited (SPV) from paying emoluments to the manpower which is engaged in providing their services in operation of the airport and this manpower can demand or and will receive their emoluments from the AAI only. Further, AAI will receive interest on delayed payment of reimbursement. Thus we observe in light of condition the emoluments received by the AAI form a part of services by transfer of outgoing concern, it seems the supply of manpower services by AAI to the M/s. Adani Jaipur International Airport Limited (SPV). 11.4) Further we find from conditions that the Select Employees may exercise their choice whether they wish to join the new entity or not, and only upon accepting the offer of employment and joining 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e M/s. Adani Jaipur International Airport Limited 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 ( RSGST ) ? Ans. 1 The Subject Supply of Transfer of Going Concern service is Supply under Section 7 CGST Act, 2017. Q.2. Whether the transfer of business by Airports Authority of India to M/s. Adani Jaipur International Airport Limited is treated as supply as going concern and covered in clause 4 of schedule II of CGST Act viz-a-viz RSGST? Ans. 2 The subject Supply is 'Transfer of Going Concern Service' and the same is not covered in clause 4 of schedule II of CGST Act viz-a-viz RGST. Q. 3. Whether the transfer of business by M/s. Airports Authority of India to M/s. Adani Jaipur International Airport Limited is covered under the Entry No. 2 of the exemption notification No 12/2017 - Central Tax (Rate) dated 28-06-2017 issued u/s Section 11 of CGST Act 2017? Ans. 3. The subject Supply is covered at Entry No. 2 of Notification 12/2017-CT(R). Q. 4. If the answer is negative, then whether GST is leviable on the transfer of Existing assets ( RAB ), Aeronautical Assets, non-aeronauti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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