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2024 (1) TMI 1344 - AAR - GST


Issues Involved:

1. Whether the transfer of business by the Airport Authority of India (AAI) to the concessionaire is treated as supply under Section 7 of the CGST Act, 2017.
2. Whether the transfer is treated as supply as a going concern under clause 4 of Schedule II of the CGST Act.
3. Applicability of exemption under Entry No. 2 of Notification No. 12/2017-Central Tax (Rate).
4. GST liability on the transfer of existing assets (RAB), aeronautical assets, non-aeronautical assets, and capital work in progress.
5. Classification of the aforesaid transfer as services.
6. Whether concession fees are consideration for transfer of business.
7. GST applicability on concession fees charged by AAI.
8. GST on reimbursement of salary/staff cost.
9. GST on reimbursement of municipal tax, property tax, and water charges.
10. Reversal requirement under Section 17(2)/(3) of CGST Act.

Detailed Analysis:

1. Transfer of Business as Supply under Section 7 of CGST Act:
The ruling clarified that the transaction between AAI and the concessionaire is not a transfer of business. The concessionaire provides services of developing the airport, while AAI provides manpower and leasing services. Both these transactions qualify as supply under Section 7 of the CGST Act as they involve supply and consideration.

2. Supply as a Going Concern:
The concept of 'Supply as going concern' does not exist in Schedule II of the CGST Act. The ruling emphasized that the transaction does not qualify as a transfer of a going concern since the airport or its activities are not transferred to the concessionaire. The agreement is a service arrangement for development and operation, not a business transfer.

3. Exemption under Notification No. 12/2017:
The ruling stated that the exemption under Entry No. 2, which covers 'Services by way of transfer of a going concern', does not apply since there is no transfer of business in this case.

4. GST on Transfer of Assets:
The ruling clarified that existing assets, aeronautical assets, and non-aeronautical assets have not been transferred to the concessionaire; hence, the question is void. However, since the assets are leased, GST is applicable on the lease consideration.

5. Classification of Transfer as Services:
As there is no transfer of assets, this question was deemed void.

6. Concession Fees as Consideration for Business Transfer:
The ruling concluded that concession fees are not consideration for a business transfer. Instead, they are consideration for leasing rights granted to the concessionaire, which constitutes a taxable supply.

7. GST on Concession Fees:
GST is applicable on the concession fees charged by AAI to the concessionaire, as this constitutes a supply of service.

8. GST on Reimbursement of Salary/Staff Cost:
The reimbursement of salary/staff cost falls under "Other employment and labor supply services" classified under HSN 998519, attracting GST at 18% (9% each for CGST and SGST).

9. GST on Reimbursement of Municipal Tax, Property Tax, and Water Charges:
The ruling opined that these reimbursements do not attract GST as they are actuals payable to government departments, aligning with Circular No. 206/18/2023-GST, which states that reimbursement of expenses without value addition is not taxable.

10. Reversal under Section 17(2)/(3) of CGST Act:
The ruling provided a general guideline that if the applicant uses goods or services partly for taxable and partly for exempt supplies, reversal under Section 17(2) is required. However, no reversal is needed under Section 17(3) since it only explains the value of exempt supply. No GST reversal is warranted for the supplies discussed.

Ruling Summary:

- The transaction is not a transfer of business but involves supply of services by both parties.
- No transfer as a going concern; thus, no exemption under Notification No. 12/2017.
- GST is applicable on the lease of assets and concession fees.
- Reimbursement of salary/staff cost is taxable under GST.
- Reimbursement of municipal taxes, property taxes, and water charges does not attract GST.
- Reversal under Section 17(2) is applicable if supplies are partly taxable and partly exempt.

 

 

 

 

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