Transfer of Specific Unit as a Going Concern via Slump Sale is Exempt Under GST

The Gujarat Authority for Advance Ruling (AAR) has ruled that the transfer of a business as a going concern, even if structured as a slump sale, is exempt from GST. The ruling classifies such a transfer under Service Accounting Code (SAC) 997119 and confirms its exemption under Notification No. 12/2017-CT (Rate). While the AAR did not definitively rule on the 'slump sale' classification itself, it recognised the transaction as a business transfer with GST implications, confirming the exemption.

The Gujarat AAR in the matter of RDB Realty & Infrastructure Limited [Advance Ruling No. GUJ/GAAR/R/2025/42order dated October 09, 2025] held that the supply made as a going concern by way of slump sale is classified under SAC 997119 and is exempt under Notification No. 12/2017-CT (Rate). The Authority refrained from answering whether the sale is classified as "Slump Sale" as the term is not defined under GST but recognized the transaction as a transfer of business with GST implications.

Facts:

M/s. RDB Realty & Infrastructure Limited ("the Applicant") is a real estate company engaged in redevelopment of Aanjana Tenements, Surat under a tender from Surat Municipal Corporation (SMC).

Pursuant to the Redevelopment of Public Housing Scheme 2016 declared by the State of Gujarat, the Surat Municipal Corporation ("SMC") decided to redevelop the Aanjana Tenements, located on F. P. No. 98 of T. P. Scheme No. 7, Surat, consisting of 416 flats and 6 shops.

SMC invited tenders from willing developers for redevelopment; the Applicant submitted the highest tender which was accepted by SMC. SMC recovered the security deposit and issued a Work Order dated August 21, 2017.

Under the tender terms, the Applicant was required to construct 416 flats with a carpet built-up area of 32.13 sqm for original occupants, 6 shops for the shop owners, and an additional 486 affordable houses with approx. 130 sqm carpet area each, to be handed over to SMC for allotment to lower income groups.

The Applicant was also responsible for internal development works including roads, water supply, electricity, drainage, and civic infrastructure, as well as operation and maintenance of the redeveloped and affordable housing for 7 years from obtaining occupancy permission.

A Deed of Lease called Principal Lease dated April 18, 2024, was executed between SMC, the Applicant, and the President of Anjana Tenements Association, leasing "Free Sale Land" (Parcel C of approx. 10,668 sqm) to the Applicant for 99 years at an annual rent of Rs. 1 per sqm, allowing commercial development rights.

The Applicant decided to transfer rights of Parcel C (Free Sale Land) to Ms. SampratiBuildcon Pvt. Ltd. by way of slump sale or any other permissible manner under the terms of the Principal Lease, Tender Agreement, and ancillary agreements between the Applicant, SMC, and Tenement Owners Association.

Copies of Notice of Extraordinary General Meeting dated March 6, 2025, Board resolutions communicating approval to Bombay and Calcutta Stock Exchanges dated March 4, 2025, and a Draft Deed of Agreement of Slump Sale were submitted.

The Applicant contended that the transfer met criteria of slump sale under Income Tax Act definition as transfer of a business as a going concern-

(a) transfer of business unit as a going concern,

(b) independent operation capability,

(c) transfer of all assets and liabilities, and

(d) lump sum consideration without individual valuation.

The Applicant submitted that the transaction's classification under GST as a going concern supply falls under SAC 997119 with 18% GST, but is exempt under Notification No. 12/2017-Central Tax (Rate), Entry No. 2, exempting transfer of a going concern as a whole or independent part.

The Applicant submitted draft agreements and financial documents to substantiate the planned transfer. The Applicant approached the Gujarat AAR seeking ruling on classification and GST exemption eligibility for the transfer.

Issue:

• Whether the sale of the specific unit of the construction site including all assets and liabilities will be classified as "Slump Sale"?
• Whether supply as "Going Concern" is under SAC 997119?
• Whether the Applicant is eligible for exemption under Entry No. (2) of Notification No. 12/2017-CT (Rate) dated June 28, 2017?

Held:

The Gujarat AAR in Advance Ruling No. GUJ/GAAR/R/2025/42 held as under:

· Noted that, Slump Sale is not defined in GST but defined under the Income Tax Act concept, and the Authority refrained from ruling on classification as "Slump Sale."

· Observed that, the transaction qualifies as transfer of business with GST implications.

· Classified supply made as "Going Concern" under SAC 997119 attracting 18% GST.

· Held that supply of a going concern, as a whole or an independent part, is exempt under Notification No. 12/2017-CT (Rate) Entry No. (2).

· Held that, the supply made as 'going concern' by way of such transfer will fall under Service Code (Tariff) 997119 and the transfer of the specific unit of construction site (with all assets and liabilities pertaining to the project) as a going concern is exempt under Notification No. 12/2017-Central Tax (Rate) Entry No. 2, provided the transaction and agreement are legally sustainable in a court of law

· Further the Authority refrained from ruling on whether the sale of specific unit of construction site (all assets and liabilities pertaining to that project) at Surat is to be classified as a 'Slump Sale' for GST purposes.

Our Comments:

The ruling logically applies the exemption under Notification No. 12/2017-CT (Rate) dated June 28, 2017 which exempts transfer of going concern as a whole or independently, consistent with GST principles treating the transfer as a supply of service.

Relevant Provisions:

Notification No. 12/2017-Central Tax (Rate), dated June 28, 2017:

"Entry No. 2: Services by way of transfer of a going concern, as a whole or an independent part thereof - Exempt."

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED