Transfer of Business as a Going Concern

[Shreyansh Agrawal]

My Client is registered under GST as Composition Dealer. Now he want to transfer a business to a person who are not yet registered under GST but he will also take registration under GST as a Composition Dealer. My query is that whether the stock will be treated as a Goods or Service and whether my client is required to pay GST on stock and is there is any consequences to other person if he receive such stock???

[YAGAY andSUN]

Sale of 'going concern' exempt from GST: AAR
Sale of a going concern by a business house will not attract GST, as per an order by the AAR. The Karnataka bench of the AAR gave its ruling based on an application filed by Rajashri Foods Pvt Ltd which wanted to sell one of its units along with fixed and current assets as well as liabilities, including bank loans, for a lump sum consideration. The AAR said that as per a government notification, any transfer of a going constitutes a 'supply of service' and 'nil' tax rate will apply on it. A going concern is a concept of accounting and applies to the business of the company as a whole. Transfer of a going concern means transfer of a running business which is capable of being carried on by the purchaser as an independent business.

AI Summary

Going concern transfer as nil-rated supply exempts business transfer from GST under notification, impacting composition dealer transfers. Transfer of a running business as a sale of a going concern is classified as a supply of service subject to a nil tax rate under the government notification, so such transfers (including unit sale with fixed and current assets and liabilities) will not attract GST; this classification governs transfers involving composition dealers and incoming purchasers who obtain composition registration.