Transfer of a functional business unit as a going concern qualifies for GST exemption under the notification.

Transfer of a functional and continuing business unit, rather than isolated assets, qualifies as a transfer of a going concern for GST purposes. The independent LoanFront mobile application business, including related software, intellectual property, employees, liabilities and business rights, was intended to move as an operational unit capable of being run by the transferee without interruption. On that basis, the transfer falls within Entry No. 2 of Notification No. 12/2017-Central Tax (Rate), which exempts services by way of transfer of a going concern, including an independent part thereof. The proposed transaction is therefore treated as an exempt supply and no GST is payable.

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Issues: Whether the transfer of the independent part of the applicant's business relating to the "LoanFront" mobile application qualifies as a transfer of a going concern and is therefore exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The transfer documents showed that the business segment comprising the mobile application, together with its related software, intellectual property, employees, liabilities, and connected business rights, was intended to be transferred as a functional unit to the transferee. The decisive consideration was that the activity was not a mere sale of isolated assets, but a transfer of a continuing and operational business unit capable of being run by the transferee without interruption. On that basis, the transferred undertaking answered the description of a going concern as an independent part of the business. Entry No. 2 of Notification No. 12/2017-Central Tax (Rate) grants exemption to services by way of transfer of a going concern, as a whole or an independent part thereof.

Conclusion: The transfer of the "LoanFront" business segment is a transfer of a going concern as an independent part of business and is exempt from GST.

Final Conclusion: The applicant's proposed transfer is treated as an exempt supply of service by way of transfer of going concern, and no GST is payable on the transaction.

Ratio Decidendi: A transfer of a functional and continuing business unit, together with its attendant assets, liabilities, and business rights, constitutes a transfer of going concern and falls within the GST exemption for such transfers.

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