The Uttar Pradesh Authority of Advance Ruling (AAR) has held that Goods and Services Tax (GST) is not applicable on the transfer of going concern by the Airport Authority of India (AAI) to Adani Lucknow International Airport.
The applicant, the Airport Authority of India (AAI), has decided to invite bids for undertaking the operations, management, and development of the Chaudhary Charan Singh International Airport on a public-private partnership basis to bring efficiency in service delivery, expertise, enterprise, and professionalism and to harness necessary investment. The applicant accepted the bid of Adani Enterprise Limited and executed the concession agreement for 50 years.
The applicant approached the AAR to know whether the transfer of business by AAI to Adani Group can be treated as a supply under section 7 of the Central Goods and Services Tax (CGST) Act, 2017 and whether such supply is a Transfer of going concern service covered under Entry No. 2 of the Exemption notification No. 12/2017.
The Authority observed that the management and development of the airport which is getting carried out by the applicant will be undertaken by the Concessionaire and hence the transaction amounts to the transfer of business from the applicant to the concessionaire without any interruption in the operation of the airport on account of the transfer. Thus, the transaction is a transfer of going concern.
The Authority further observed that any transfer of going concern is a supply of service and exempted from levy of tax. Thus, the transfer of a business as a going concern as a whole or independent part thereof is considered a service, and the same has been specifically exempted from the levy of GST under Entry No. 2 of the Exemption notification No. 12/2017notification.
The Coram of Mr. Abhishek Chauhan, Member (Central Tax), and Mr. Vivek Arya, Member (State Tax) has held that the transfer of business by the Airport Authority of India to the M/s. Adani Lucknow International Airport Limited be treated as Supply u/s. 7 of the Central Goods and Service Tax Act, 2017, and the transfer is covered under Entry No. 2 of the exemption notification No 12/2017.
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