GST on sale of ongoing concern without movement of goods

[Kaustubh Karandikar]

XYZ (Proprietory Concern) has sold its entire business to PQR Pvt. Ltd. under slump sale of ongoing concern arrangement i.e., transfer of a whole of business concern as a going concern. There will not be any physical movement of goods from XYZ to PQR and therefore no GST payment by XYZ. The premises of XYZ will be declared as additional place of business by PQR. XYZ will not be surrendering the GST Registration till all the required returns are not filed under GST. PQR will in the meantime start using the goods lying in the premises of XYZ. Is this in line with the provisions of GST?

AI Summary

XYZ Sold to PQR Pvt. Ltd. in Slump Sale; XYZ Retains GST Registration Until Returns Filed; Rule 42 Applies. An ongoing business concern, XYZ, has been sold to PQR Pvt. Ltd. through a slump sale arrangement, transferring the entire business as a going concern without moving physical goods. Consequently, XYZ is not required to pay GST. PQR will declare XYZ's premises as an additional business location and begin using the goods there. XYZ will retain its GST registration until all returns are filed. Responses indicate this arrangement complies with GST provisions, but note the need for common credit reversal under rule 42 and ineligibility of complete credit for specific services like due diligence.