The West Bengal Authority for Advance Ruling ( AAR ) ruled that transfer of the going concern service is a supply and draws NIL GST.
The applicant, Cosmic Ferro Alloys Limited is engaged in the making of Ferroalloys and cold-rolled formed sections in its two units. The applicant’s poses to sell one of its units as a whole consists of transferring all the assets to the buyer that secures taking over all the due liabilities and subjected to pay on the transfer date for a lump sum consideration.
The petitioner has asked the council to clarify that if the suggested transaction of the transfer of the business as a going concern comes beneath entry no 2 of the Notification No. 12/2017- Central Tax and NIL Rate of GST will apply.
The petitioner through laying the decision of Gujarat AAR in M/s Airport Authority of India moreover said that with respect to the supply of transfer of the going concern service is supply beneath section 7 CGST act and comes at entry no 2 of Notification 12/2017-CT(R)
The council sees that BTA refers the buying will continue to employ the present employees of the unit even post to the business takeover. Moreover, the petitioner has agreed that he will not qualified to be involved in any business contending with the executions of the buyers for the existing business. Both the clauses show that the business would be carried on by the buyer.
The division bench of Mr. Brajesh Kumar Singh, Joint Commissioner, CGST, and Mr. Joyjit Banik, Senior Joint Commissioner, SGST sees that to be entitled as a going concern the business should not pose any intention or necessity of liquidation. Towards the case, the council specified that the application would not file any documentary evidence from the auditor with respect to the entity’s ability to carry on the operation for the near time, in absence of which we would not able to complete that the petitioner would not want to curtail materially the scale of the operations.
“The council moreover specified that the transaction of transfer of a business unit of the applicant involved in the instant shall be treated as a supply of services and further held that the transaction comes under Entry No. 2 of the GST notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 subject to fulfillment of the conditions to qualify as a going concern.”
