In re M/s Rajeev Bansal and Sudershan Mittal (GST AAR Uttarakhand)
Whether business transfer agreement as a going concern which consists of transferring under construction building project is covered under S. No. 12 of the Notification No. 12/2017 Central Tax (Rate) and its thus exempt from the applicability of GST?
From the record we find that the applicant is carrying on the business of constructing residential/commercial complexes and selling thereof and the applicant firm come into existence particularly for the said project. Further on perusal of the sale deed dated 24.10.2019, we find that the applicant has sold the under-construction building, as a whole, situated at village- Manoharpur, Pargana-Jwalapur, District-Hardwar with its all assets and transfer the rights of the same to the buyer including the approved map from the competent authority. The buyer has purchased the under-construction building/business to carry on the same kind of business as the purchaser themselves engaged in constructing residential/commercial complexes and selling thereof . Further as on date we find that there is no series of immediately consecutive transfers of the said business.
7.7 In view of the above we thus observe that the applicant has transfer the business as a going concern to M/s Ronav Infrastructure and it may treated as supply of services and as per serial no. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time), the same is exempted from levy of GST as on date.
FULL TEXT OF ORDER OF BEFORE THE AUTHORITY OF ADVANCE RULING, UTTRAKHAND
1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s Rajeev Bansal & Sudershan Mittal, 789, 1st Floor Awas Vikas Ranipur More, Hardwar, Uttarakhand seeking an advance ruling on whether “Business Transfer Agreement” as a going concern which consists of transferring under-construction project is covered under serial no. 12 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (herein after referred to as “said notification”) and thus exempted from the applicability of GST.
2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
3. As per the said subsection (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of :
(a) Classification of any goods or services or both
(b) Applicability of a notification issued under the provisions of this Act,
(c) Determination of time and value of supply of goods or services or both,
(d) Admissibility of input tax credit of tax paid or deemed to have been paid
(e) Determination of the liability to pay tax on any goods or services or both
(f) Whether the applicant is required to be registered
(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
4. In the present case applicant has sought advance ruling on applicability of exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 on “Business Transfer Agreement” as a going concern which consists of transferring under-construction project. Therefore, in terms of said Section 97(2)(b) of Act, the present application is hereby admitted.
5. Accordingly opportunity of personal hearing was granted to the applicant on 19.12.2019. Shri Himanshu Sharma (CA) and Amrit Aswal (CA), on behalf of the applicant appeared for personal hearing on the said date and submitted that the written submissions to be taken on record.
6. From the record we find that applicant is registered in Uttarakhand with GSTIN bearing no. 05AARFR4816L2ZO. The submissions of the applicant are summarized as under:
(i) That the applicant is a partnership firm engaged in the business of constructing residential/commercial complexes.
(ii) That the firm was formed for constructing and selling a residential/commercial building at village- Manoharpur, Jwalapur,
(iii) That the applicant got the map approved from the competent authority.
(iv) That the covered area was around 1.25 lakhs sq feet. A total carpet area of 85 thousand sq feet was constructed up to the date of transfer.
(v) That M Is Ronav Infrastructure (buyer) engaged in the same business, approached the applicant to take over this incomplete project to further carry out the business of constructing and selling the said building.
(vi) That the applicant entered into an agreement with M/s Ronav Infrastructure for transfer of the business as a “going concern”. The main asset of the business being the land, the incomplete flaats constructed on the land and the approved map. A separate sale deed was executed for transfer off flats as required under the state law for Rs. 21.80 crores on 24.10.2019.
7. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which was filed for our consideration in the application. Now we proceed as under:
7.1 Whether “Business Transfer Agreement” as a going concern which consists of transferring under- construction project, is exempted from the levy of GST in terms of serial no. 12 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. We have gone through the said notification and we find that the issue in hand pertains to serial no. 2 of the notification and not to serial no. 12 of the said notification as mentioned by the applicant in their application and accordingly we reproduce the relevant portion of the said Notification as under:
Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
G.S.R………… (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under 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:-
