Transfer of Business

[Kaustubh Karandikar]

XYZ (Proprietor) is registered with GST.

1) Owning Sweet and Namkeen Shops and Manufacturing Factory of Sweets and Namkeen.

2) Owning Commercial Premises given on rent. On both activities XYZ is charging GST. Now, the Sweet and Namkeen activity to be converted from Proprietor to Private Limited Company and the Commercial Premises will continue to be in the name of Proprietor. Whether XYZ can claim the exemption from paying GST as available under Notification No. 12/2017 CT (Rate) i.e. Services by way of transfer of a going concern, as a whole or an independent part thereof, as the entire business is not transferred and renting business will remain with XYZ?

[Amit Agrawal]

As rightly said by you, Sir, exemption is indeed available for "Services by way of transfer of a going concern, as a whole or an independent part thereof."

Hence, exemption is available in given situation of yours, provided legal documents proves it as transfer of going concern.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Kaustubh Karandikar]

Thanks Sir, for your kind advice.

[Shilpi Jain]

If all the assets and liabilities that are required to run the sweet shop business are transferred, it would be a transfer of a going concern and not liable to GST

AI Summary

Transfer of going concern exemption applies when assets and liabilities necessary for the business are transferred, relieving GST liability.
The GST exemption for transfer of a going concern applies where the proprietorship's sweet and namkeen business is converted into a private limited company and the transfer includes the assets and liabilities necessary to run that business; the exemption can still apply even if the proprietor retains unrelated rental premises, provided documentary evidence establishes the transfer as a going concern.