Death of Proprietor-Comments Requested

[ROHIT GOEL]

Dear Sirs,

Mrs. X was carrying out business as sole proprietor and registered under GST. In Oct 2017, Mrs. X died and her business was taken over on as-is basis by her son, Mr. Y. w.e.f very next day. However, instead of transferring the business to himself on a going concern basis, he continued to run the business under the same PAN and GST number for another year. In the meantime, GST and income tax returns were filed under the credentials of his late mother. By March 2019, he ceased business activity, however the firm had a substantial ITC Balance majorly on account of excess VAT credit carried forward via TRAN-1.

Now, Mr. Y intends that this business alongwith its existing assets and liabilities including ITC be transferred to his son i.e. Mr. Z on a going concern basis, owing to old age of Mr. Y.

My questions are:

a) Could Mr. Y have carried on business upon death of his mother under the same GST and PAN number?

b) Can Mr. Y in capacity of legal heir transfer the business on a going concern basis to his son and claim exemption from GST under relevant CGST (Rate) notification ?

c) Can Mr. Y transfer the ITC Balance to GST no. of Mr. Z via Form ITC-02?

I found these facts peculiar so wanted to know experts' views regarding the same.

[KASTURI SETHI]

(a). No. It is violation of GST Act. May attract penalty.

(b) (c) : Go through the following circular:-

Input Tax Credit (ITC) - Transfer of ITC in case of death of sole proprietor - Clarification

Circular No. 96/15/2019-GST, dated 28-3-2019