Composite business transfer cannot be split into taxable movable sales without examining whether it is a going-concern slump sale.

Transfer of a business as a going concern could not be mechanically dissected into taxable sales of individual movables where the factual record supported a composite slump sale. The assessment was also found cryptic and made without affording a personal hearing. The Court held that the authority had to examine the agreements, sale deeds and balance-sheet materials on the correct legal footing before determining whether the Tamil Nadu Value Added Tax Act treated the transaction as a sale of goods. The assessment order was quashed and the matter remanded for fresh consideration after a personal hearing.

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Issues: Whether the assessment treating the transfer of the undertaking and movable assets as taxable sale of goods was sustainable, and whether the matter required fresh consideration after affording personal hearing.

Analysis: The dispute turned on whether the transaction was a sale of movables attracting tax under the definition of sale in the Tamil Nadu Value Added Tax Act, 2006, or a transfer of the business as a whole / slump sale. The assessment order was found to be cryptic and to have been completed without personal hearing. The Court applied the settled principle that where a unit or business is transferred as a going concern, the transaction cannot be mechanically split up to tax individual assets if the factual matrix supports a composite transfer. The authority was therefore required to examine the agreements, sale deeds and balance-sheet material and determine the nature of the transfer on the correct legal footing.

Conclusion: The assessment order was quashed and the matter was remanded for fresh consideration after giving the petitioner an opportunity of personal hearing.

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