GST under RCM on stamp duty

[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. For this purpose, Stamp Duty paid by PQR to Govt. of Maharashtra against ‘Business Transfer Agreement’. Is PQR required to pay GST under reverse charge on the stamp duty paid under the category ‘Services provided by Govt.’?

[Shilpi Jain]

It is in the nature of tax and not fee for services. No gst

[KASTURI SETHI]

Dear Sir, Stamp duty is a tax. It is always borne by the buyer. It is liability of buyer. The supplier has nothing to do with this tax. Here service is exempt by virtue of notification (if the supplier conforms to the parameters). If service is exempt, no question of inclusion of stamp duty in the taxable value by the supplier. Hence no question of applicability of RCM. To cap it all, no GST on stamp duty from both aspects in this scenario.

[CA Hemanth Kumar]

Dear Sir,

We can say there is no supply made by dept and what we paid is a tax, not a consideration.

Even if dept says it is a supply, it is exempt from GST as per S.No 47 of 12/2017 CT

Services provided by the Central Government, State Government, Union territory or local authority by way of-

(a) registration required under any law for the time being in force;

(b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, required under any law for the time being in force.

[KASTURI SETHI]

I concur with the views of Sh. CAHemanth Kumar Ji.

AI Summary

GST on stamp duty is not payable as stamp duty is a tax, not a taxable supply, so reverse charge does not apply. Stamp duty paid by a purchaser for a business transfer agreement is a tax, not consideration for a service; accordingly it does not constitute a taxable supply and GST under the reverse charge mechanism is not payable; alternatively, services provided by government would be exempt under the applicable notification even if treated as a supply.