ITC CREDIT UNDER YNVAT ACT

[Guest]

ITC CREDIT RULES UNDER TNVAT ACT FOR TAKE OVER OF A RUNNING CONCERN BY THIRD PARTY OR SON AND RUNNING THE SAME UNDER NEW REGISTRATION

[Ganeshan Kalyani]

The respective States' VAT law is silent on whether VAT is liable to be paid on buying/selling a company on slump sale basis. However, there are case laws which states that buying / selling a concern on slump sale is not a regular business activity and hence VAT shall not be applicable on slump sale. However if VAT is charged on such transaction then in my view Input Tax Credit should be allowed to the assessee buying such concern on a slump sale basis . Thanks .

AI Summary

ITC Applicability in Slump Sale: VAT Not Explicitly Addressed, Case Law Suggests ITC Should Be Allowed to Buyer A query was raised about the applicability of Input Tax Credit (ITC) under the TNVAT Act when a running concern is taken over by a third party or a son and operated under new registration. The response highlighted that state VAT laws do not explicitly address VAT liability in the context of buying or selling a company on a slump sale basis. However, case laws suggest that such transactions are not regular business activities, and VAT should not apply. If VAT is charged, it is suggested that ITC should be allowed to the buyer in a slump sale scenario.