GST on Transfer of business as going concern but without Debtors, crditors and loan.

[deepak gulati]

We have to transfer the running business of a partnership firm to a private limited company, and the new company has an outside investor holding 40%. The New company does not want to take over the Debtors, creditors, loans, miscellaneous assets, etc. The new company intends to take over Machinery, Stock, Goodwill, vendor codes, and goodwill. Will this supply be exempt under Notification 12/2017?

 

AI Summary

Transfer of Going Concern: partial asset transfers can be GST exempt if business continuity and operability are preserved.
A transfer excluding debtors, creditors and loans may still qualify as a transfer of a going concern and be exempt under Notification No.12/2017 if the assets transferred amount to an independently operable business unit and the transferee continues the business without interruption. Liabilities need not be taken over, but continuity of operations must be evidenced. Parties must document the transfer via a Business Transfer Agreement, board resolutions and operational records, and address joint and several liability exposure through disclosures and indemnities to manage GST compliance risk.