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Services by way of transfer of business as a going concern is exempted from GST
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....ervices by way of transfer of business as a going concern is exempted from GST<br>By: - Ganeshan Kalyani<br>Goods and Services Tax - GST<br>Dated:- 17-4-2020<br><br>Ref Case : IN RE: M/S. RAJEEV BANSAL AND SUDERSHAN MITTAL [2020 (4) TMI 67 - AUTHORITY FOR ADVANCE RULING, UTTARAKHAND] The Applicant M/s. Rajeev Bansal & Sudershan Mittal, 789, 1st Floor Awas Vikas Ranipur More, Hardwar, Uttarakhand ....
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....has made an application before the Authority for Advance Rulings for the State of Uttarakhand on 05.12.2019. The application was filed seeking advance ruling on whether "Business Transfer Agreement" as a going concern which consists of transferring under-construction project is covered under serial no.12 of the Notification no.12/2017-CTR dated 28.06.2017 and thus exempted from the appli....
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....cability of GST. The application was accepted and personal hearing was granted on 19.12.2019. Following submissions were made by the applicant before the authority: * That the applicant is a partnership firm engaged in the business of constructing residential /commercial complexes. * That the firm was formed for constructing and selling a residential/commercial building at village - Manoharpu....
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....r, Jwalapur, Hardwar. * That the applicant got the map approved from the competent authority. * That the covered area was around 1.25 lakhs sq.feet. A total carpet area of 85 thousand sq.feet was constructed up to the date of transfer. * That M/s. Ronav Infrastructure (buyer) engaged in the same business, approached the applicant to take over this incomplete project to further carry out the ....
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....business of constructing and selling the said building. * That the applicant entered into an agreement with M/s. Ronav Infrastructure for transfer of the business as a "going concern". The main asset of the business being the land, the incomplete flats constructed on the land and the approved map. A separate sale deed was executed for transfer of flats as required under the state law f....
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....or ₹ 21.80 Crores on 24.10.2019. The authority has gone through the exemption notification no.12/2017-CTR dated 28.06.2017 and found that the question under the application falls under serial no.2 of the said notification which states as "services by way of transfer of a going concern, as a whole or an independent part thereof". The authority looked into the definition of busines....
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....s as given under section 2(17) of CGST Act, 2017. The said section defines the term "business" as business includes ....... (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;.... From the above definition, the authority found that the acquisition of goods/services for commencement of business is covered under t....
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....he definition of business. The authority further observed that a transfer of a business as a going concern is sale of a business including assets. In terms of financial transaction "going concern" means that at any point of time the business is live or operating and has all parts and features necessary to keep it in operation. Thus, "transfer of a going concern" in a simply wa....
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....y can be described as transfer of a running business which is capable of being carried on by the purchaser as an independent business. The authority has also referred to the internationally accepted guidelines issued by His Majesty's Revenue & Customs (HRMC) to treat transfer of business as a going concern. They are as under: * The assets must be sold as part of a 'business' as a &....
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....#39;going concern'. * The purchaser intends to use the assets to carry on the same kind of business as the seller. * Where only part of a business is sold it must be capable of separate operation * There must not be a series of immediately consecutive transfers. The authority has perused the sale deed dated 24.10.2019, and found that the applicant has sold the under-construction buildin....
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....g, as a whole, situated at village - Monoharpur, Pargan-Jwalapur, District-Hardwar with its all assets and transfer the rights of the same to the buyer including the approved map from the competent authority. The buyer has purchased the under-construction building/business to carry on the same kind of business. Further, it is also found that there is no series of immediately consecutive transfers....
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.... of the said business. In view of the above, the authority observes that the applicant has transferred the business as a going concern to M/s Ronav Infrastructure and it may be treated as supply of services as per serial no.2 of the Notification No. 12/2017-CTR dated 28.06.2017 and thus the transaction is exempted from GST.<br> Scholarly articles for knowledge sharing by authors, experts, profess....
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....ionals ....