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?

[Shilpi Jain]

This should be fine.

[CA Hemanth Kumar]

Also consider that since supply is exempt from GST, we need to comply with the requirement of common credit reversal under rule 42.

Specific services take for business transfer like due diligence- complete credit is ineligible.

Common credit if any- need to do rule 42 reversal

AI Summary

Supply of business as going concern exempt from GST but triggers common credit reversal obligations. A slump sale of an entire business as an ongoing concern without movement of goods qualifies as a supply of business as going concern and is not subject to GST; the buyer using goods at the seller's premises and declaring that premises as an additional place of business does not alter that treatment. Where the supply is exempt, common input tax credit must be apportioned and reversed under rule 42, and specific credits for services incurred for the transfer (such as due diligence) are ineligible and must be disallowed.