Namaste DOST!

Imagine this:

You’ve built an entire housing project—land, flats, shops, everything—and now you wish to transfer it to another developer.

Naturally, one big question arises — “Will GST apply to this sale?”

That’s exactly the situation faced by M/s RDB Realty & Infrastructure Ltd., whose case before the Gujarat Authority for Advance Ruling (AAR) gives every builder and investor an important GST lesson.

Summary

M/s RDB Realty & Infrastructure Ltd. (“RDB”) was redeveloping a public-housing project in Surat under a scheme of the Surat Municipal Corporation (SMC).

Later, RDB decided to transfer the entire project—land-lease rights, assets, and liabilities—to another company, M/s Samprati Buildcon Pvt Ltd., for ₹60 crore.

RDB sought clarity:

Is this a slump sale (and therefore taxable), or a transfer of business as a going concern (and therefore exempt)?

The Gujarat AAR (Advance Ruling No. GUJ/GAAR/2025/42, dated 1 Oct 2025) ruled that the deal qualified as a transfer of business as a going concern, classifiable under SAC 997119, and hence exempt from GST under Notification No. 12/2017 – CT (Rate), Entry 2—subject to the agreement being legally valid.

Facts of the Case

RDB, a real-estate company registered under GST, won a tender floated by SMC for redevelopment of the Aanjana Tenements Scheme—a cluster of 416 flats and 6 shops for existing occupants and 486 affordable houses for lower-income groups.

In return for building the public-housing portion, SMC leased RDB a 10,667.52 sq. m. plot (“Free Sale Land”) for 99 years, giving the developer rights to construct and sell units commercially. RDB was responsible for transit accommodation, internal infrastructure, and maintenance for 7 years.

Later, RDB decided to hand over this entire project—including the land-lease rights and all associated assets and liabilities—to Samprati Buildcon Pvt Ltd. through a lump-sum transfer valued at ₹60 crore.

Draft agreements, board resolutions, and tender documents were placed before the AAR for advance ruling on the GST treatment.

Legal Issue

1. Whether such transfer of the entire project, with all assets and liabilities, amounts to a “slump sale” under GST.

2. Whether the transfer can be treated as a “supply of a going concern” under SAC 997119.

3. Whether it qualifies for GST exemption under Notification No. 12/2017 – CT (Rate), Entry 2.

Arguments by the Applicant

• Meaning of Slump Sale: Though GST law doesn’t define the term, RDB relied on Section 50B of the Income-tax Act, 1961, where a slump sale means transfer of an entire business for a lump-sum price without assigning separate values to assets or liabilities.

• Why Their Case Fits:

  • Only one distinct business unit (Aanjana Tenements) was being transferred.

  • The project could operate independently.

  • All assets and liabilities were included.

  • Consideration was in one lump sum.

• Tax Treatment Claimed: They contended that it would fall under SAC 997119 (Financial Services) and that Notification 12/2017 exempts transfer of a business as a going concern from GST.

• Precedents Cited:

  • Airports Authority of India (2023 (76) GSTL 391 – AAR Rajasthan)

  • Pico2Femto Semiconductor Services Pvt Ltd. (2023 (73) GSTL 281 – AAR Karnataka)

  • Rajashri Foods Pvt Ltd. (KAR/ADRG 06/2018)

⚖️ AAR Decision (1 October 2025)

1. On the Term “Slump Sale”

The AAR clarified that GST law doesn’t define “slump sale”; it’s an income-tax concept. Therefore, it declined to label the transaction a slump sale but proceeded to test whether it was a transfer of business as a going concern.

2. Transfer of a Going Concern

Relying on Notification 12/2017 – CT (Rate), the AAR held that services by way of transfer of a going concern, as a whole or independent part, are exempt from GST.

To assess if RDB’s transaction met the test, it applied HMRC (UK) guidelines cited in Re Innovative Textiles Ltd. (2019 (24) GSTL 480 – AAR):

• Assets must be sold as part of a business continuing as a going concern.

• The buyer must intend to carry on the same business.

• The part sold must be capable of independent operation.

• There must not be a chain of successive transfers.

The AAR found all four conditions satisfied—RDB transferred a self-contained project, the buyer intended to continue operations, and there was a single, standalone transfer.

Hence, the transaction was classified as a supply by way of transfer of a going concern under SAC 997119.

3. Exemption from GST

Even though such financial services normally attract 18% GST under Notification 11/2017, the AAR confirmed complete exemption under Notification 12/2017 – Entry 2.

4. Legal Validity Condition

The ruling applies only if the transfer agreement between RDB and Samprati Buildcon is legally valid, since SMC and the Tenement Owners’ Association were part of the original redevelopment framework.

Legal Reasoning & Analysis

This case establishes a practical principle:

“ slump sale” for income-tax purposes can still be a “transfer of a going concern” under GST — and therefore GST-exempt.

Schedule II of the CGST Act deems transfer of business assets as a supply of goods or services, but specifically excludes the transfer of a business as a whole and as a going concern.

Thus, a genuine project handover that continues business activity is treated not as a new taxable supply but as business continuity.

For real-estate developers and corporate groups engaged in restructuring, this ruling confirms that where ownership changes but the business continues, GST should not apply.

Takeaways for Developers & Investors

✅ Understand the Law: Transfer of an ongoing business (fully or partially) is exempt from GST under Notification 12/2017.
✅ Transfer Everything: The deal must include all assets and liabilities of that unit.
✅ Lump-Sum Only: No separate valuation of individual assets—just one consolidated price.
✅ Continuity Counts: The new owner must continue the same line of business.
✅ Paperwork Matters: Proper agreements and stakeholder NoCs are essential to support exemption.

Why This Matters

This ruling reinforces confidence in business restructuring. It tells every builder and entrepreneur that when business continues, tax should not interrupt.

It aligns Indian GST practice with international standards—where continuity, not form, determines taxability.

Conclusion

What started as a redevelopment project in Surat became a valuable case study for every developer in India.

The Gujarat AAR’s decision ensures that genuine project transfers and corporate reorganizations are not burdened with unnecessary GST.

At GST DOST, we believe in this simple truth: “Compliance brings clarity, and clarity builds confidence.”

When you know the law, you can use it to protect your business and grow without fear.

“📞 Need help with a similar case? Contact GST DOST for personalized advice and documentation support.

FAQ

Q 1. What was the dispute?

Whether transferring a full real-estate project (land-lease rights, assets & liabilities) to another developer was taxable under GST.

Q 2. What did the AAR decide?

The Gujarat AAR held it was a transfer of a going concern, falling under SAC 997119, and exempt from GST under Notification 12/2017 – CT (Rate).

Q 3. Is every slump sale GST-free?

Not necessarily. Only if it meets the going concern criteria—continuity, completeness, and single lump-sum transfer—does the exemption apply.

Q 4. What is SAC 997119?

It covers “Other financial services (except investment banking, insurance, and pension services)”, used to classify business transfers as financial services.

References

• Case Citation: M/s RDB Realty & Infrastructure Ltd. (now RDB Infrastructure & Power Ltd.) v. State Tax Officer – Gujarat AAR, Advance Ruling No. GUJ/GAAR/2025/42 (01 Oct 2025).

• Statutes & Notifications:

  • Section 7 & Schedule II, CGST Act 2017

  • Notification No. 12/2017 – Central Tax (Rate), Entry 2 – Transfer of business as a going concern (Exempt)

  • Notification No. 11/2017 – Central Tax (Rate), Entry 15(vii) – SAC 997119 (18%)

  • Re Innovative Textiles Ltd. (2019 (24) GSTL 480 – AAR GST)

  • Re Pico2Femto Semiconductor Services Pvt Ltd. (2023 (73) GSTL 281 – AAR Karnataka)