Sale of biomass power plant by liquidator deemed supply of goods, not services. GST exemption not applicable.

The authority ruled that the sale of the biomass power plant by the liquidator constitutes a supply of goods, not services. Therefore, the claimed GST exemption under Notification No.12/2017-Central Tax (Rate) does not apply as it pertains to the transfer of a business as a going concern, considered a supply of services. Consequently, GST at the applicable rate is leviable on the intrastate supply of the biomass power plant.

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Issues Involved:
1. GST liability on the purchase of Biomass Power Plant (8 MW Capacity) by way of transfer of a going concern through e-auction.

Issue-Wise Detailed Analysis:

1. GST Liability on the Purchase of Biomass Power Plant:

Facts of the Case:
The applicant acquired a biomass power plant of 8 MW capacity located at Sirgitti Industrial Area, Bilaspur from M/s Vandana Vidyut Limited through an e-auction conducted by a liquidator appointed by the Hon'ble NCLT under the Insolvency and Bankruptcy Code 2016. The liquidator, through a sale notice dated 07.02.2020, declared that the sale was directed by Hon’ble NCLT to be conducted as a going concern. The applicant received a Letter of Intent on 25.02.2020, proposing that GST would be charged in addition to the final bid amount. The applicant contended that the transaction is considered a supply of service and exempt from GST under Sl.No.2 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.

Contentions of the Applicant:
The applicant argued that acquiring a power plant unit as a going concern is exempt from GST under Sl.No.2 of Notification No.12/2017-Central Tax (Rate). They cited similar rulings from the Authority for Advance Ruling Karnataka and Uttarakhand, which upheld that the transfer of a business unit as a going concern is exempt from GST. The applicant emphasized that the biomass power plant has an existing power purchase agreement and intends to continue the business operations as they are, thus qualifying as a going concern.

Legal Position, Analysis, and Discussion:
The authority clarified that the provisions for implementing the CGST Act and the Chhattisgarh GST Act, 2017 are similar. The applicant sought an advance ruling based on the Hon'ble NCLT's decision directing the liquidation of M/s Vandana Vidyut Limited as a going concern. The Insolvency and Bankruptcy Code, 2016 stipulates that once an entity defaults on a certain threshold amount, the Corporate Insolvency Resolution Process (CIRP) is triggered, and the management of the entity’s assets vests with an interim resolution professional or resolution professional who continues to run the business as a going concern until the insolvency proceedings are over.

Relevant Legal Provisions:
The authority referred to Notification No.12/2017-Central Tax (Rate), which exempts the intra-State supply of services by way of transfer of a going concern from GST. They also referenced Section 7 of the CGST Act, 2017, which defines the scope of supply, and SCHEDULE II, which specifies activities or transactions to be treated as supply of goods or services. Clause 4(a) of SCHEDULE II states that the transfer or disposal of goods forming part of the assets of a business is a supply of goods, while Clause 4(c) specifies that the transfer of a business as a going concern does not constitute a supply of goods but a supply of services.

Conclusion:
The authority concluded that the sale of the biomass power plant by the liquidator is a supply of goods, not services. The claimed exemption under Notification No.12/2017-Central Tax (Rate) is not applicable as it pertains to the transfer of a business as a going concern, which is a supply of services. The sale of assets as a going concern is considered a supply of goods and thus subject to GST. Consequently, the exemption provided under serial no.2 of the Notification No.12/2017-Central Tax (Rate) does not apply to the intrastate supply of the biomass power plant, and GST at the applicable rate is leviable on the said supply.

Order:
The ruling concluded that the exemption under serial no.2 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the intrastate supply of the Biomass Power Plant (8 MW Capacity) as a going concern, and GST at the applicable rate is leviable on the said supply.

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