The Authority of Advance Ruling (AAR), Uttrakhand gave the verdict stating that under the ‘Business Transfer Project’ the transfer of under-construction projects will be immune from Goods and Service Tax (GST) Levy.
M/s Rajeev Bansal and Sudershan Mittal (the applicants) are both into construction business dealing in residential and commercial properties. The applicant firm came into the scenario basically for the project.
As per the sales contract, the applicant sold the building that was under construction along with all the assets and the approved map of the construction from the competent authority. The purchaser who was also into the construction business bought the building to complete the construction and sell it to potential buyers.
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The applicant firm has filed the petition to advance ruling asking for the clarity on whether the business transfer agreement consisting of transfer of under-construction building 12/2017 Central Tax (Rate) is exempt from the levy of Goods and Service Tax (GST) or not?
AAR (Uttrakhand) having influentials like Vipin Chandra and Amit Gupta, standing firm with the concept of business as stated under section 2(17), said that “From the definition of the business we find that the acquisition of goods/ services for the commencement of ‘business’ is covered under the said definition. We observe that a transfer of a business as a going concern is the sale of a business including assets. In terms of financial transaction ‘growing 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. Thus ‘Transfer of a going concern’ in a simple way can be described as the transfer of a running business which is capable of being carried on by the purchaser as an independent business.”
The final verdict by AAR said that the transfer of under-construction projects under the Business Transfer Project is exempt from Goods and Service Tax (GST) levy.