TaxTMI 
TaxTMI 
2020 (11) TMI 1039
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....zianagaram Central GST Division filed an application in Form GST ARA-03 on 25.08.2020 before the Appellate Authority for Advance Ruling, Andhra Pradesh seeking clarification in case of M/s. Shilpa Medicare Limited, Modavalasa Village, Denkada Mandal, Vizianagaram. 2. M/s. Shilpa Medicare Limited undertakes Research & Development work in Active Pharmaceutical Ingredient (API) & formulation molecules & manufacture of formulation products in small quantity for R & D purpose. 3. R&D centre is involved in formulation & Analytical development and also method validations for analytical tools. Formulation research centre is concentrated in developing generic equivalents and super generics to reference listed Drugs for Global Market like USA, Europe and Row for injectable and oral formulations used for the treatment of cancer and other indications like Multiple sclerosis, Hypertension, CNS disorders, Anti-Diabetics, Myasthenia gravis, Ogilvie syndrome, Ulcerative colitis urinary retention, liver diseases, HIV, smoking cessation, Alopecia, and eye disorders etc. 4. It was mentioned that the whole business of M/s. Shilpa Medicare Limited unit, Vizianagaram, Andhra Pradesh - 531162 vi....
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....e the transfer of the business as a going concern is carried out to a distinct but same person" in terms of Section 2 (84) of CGST Act, 2017 i.e., M/s. Shilpa Medicare Limited, Plot No. 29-A5, Avverahalli Industrial Area, Bengaluru, (Bengaluru) Rural, Karnataka-562117, as a going concern having GSTIN: 29AADC8788F1Z0 but not to another person. As M/s. Shilpa Medicare Limited, Survey No. 2017, Modavalsa Village, DenkadaMandal, Vizianagaram, Andhra Pradesh-531162 having GSTIN 37AADCS8788F1ZR are holders of the same PAN, they are distinct but same persons in terms of section 2 (84) of CGST Act, 2017 and M/s. Shilpa Medicare Limited, Bengaluru cannot be treated as another person. So the provisions of Para 4 (c) of Schedule II of CGST Act, 2017 do not apply in this case. Hence, it cannot be treated as supply of services. Moreover, as per the AAR order No.05/AP/GST/2020 dated 24.02.2020, it was enunciated that the applicant had not submitted any documentary evidence to establish that the transaction is a going concern except for his categorical declaration in the application as such. Hence this office cannot conclude beyond doubt that the business is transferred as a going concern. 2.3....
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.... (3) of the CGST Act, 2017 states that: "Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed." The methodology for the transfer of such credit is given in Rule 41 of the CGST Rules, 2017 as detailed below: "A registered person shall in the event of sale, merger, de-merger, amalgamation, lease or transfer or change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee". 4.1. The Section 18 (3) of the CGST Act, 2017 is applicable only when there is a change in the constitution of business of the registered ....
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....umstances of the case. 5. Virtual Hearing: The proceedings of Hearing were conducted through video conference on 20th October 2020, for which the appellant himself, The Deputy Commissioner (Central Tax), Vizianagaram attended and reiterated the submissions. M/s. Shilpa Medicare Limited also attended and presented their arguments as under. 5.1. At the outset it is submitted that the appeal filed by the Department is solely based on assumptions and presumptions and not based on the provisions of Law and hence the same merits to be set aside on this ground alone. In this regard it is submitted that in para no 1.3 of the Grounds of Appeal, in the last sentence the Department has admitted that it is presumed view when it has stated that - quote- "Hence it can be presumed that there is no consideration..." Unquote. 5.2. With regard to the other points raised by the Department, the main objections of the Department are: a. The assesse has declared as their nature of business activity as 1. Scientific and Technical Consultancy (SAC 00440125) 2. Technical Testing, Inspection, certification (SAC 00440249). The department observes that the assesse has....
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.... b) a Hindu Undivided family; c) a company; d) a firm; e) a Limited Liability Partnership; f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the companies Act, 2013; h) anybody corporate incorporated by or under the laws of a country outside India; i) a co-operative society registered under any law relating to co-operative societies; j) a local authority; k) Central Government or a State Government; I) Society as defined under the Societies Registration Act, 1860; m) Trust; and n) every artificial juridical person, not falling within any of the above; As the AAR order itself made it very clear that the "thus, it disqualifies the going concern' to be grouped under 'supply of goods' as per the above - mentioned clause 4 ( c). So the objections of the learned JO are not at all clear and hence not maintainable. 5.4. The learned JO points about the....
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....In terms of Sec. 2 (52) of CGST Act, 2017, "goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply". Therefore, to be called as goods, it has to be movable property. As business cannot be said to be movable, transfer of business cannot be said to be a transfer of goods. Now, we shall examine whether the said transaction can be called as service. In terms of sec. 2 (102), services mean anything other than goods. The term service is wider in its scope. As it covers anything other than goods, transfer of business which cannot be considered transfer of goods will fit into the definition of "service". Further, in case of the judgement given by Andhra Pradesh High Court in case of Paradise Food Court v. State of Telangana 2017 VIL 238 AP in the context of VAT Law, it was held that the "business" is not movable property and is, therefore, not goods. Hence, based on the above we can conclude that transfer of business is a service. In the case of itemized sale, if the business is not transferr....
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....nsfer of business shall be transfer of a going concern. • The business which is being transferred shall be transferred as a whole or independent part. Now let us analyze what is meant by the word going concern. The term going concern is not defined in the GST law. Reference can be made to Accounting Standard (AS1) issued by the Institute of Chartered Accountants of India according to which "the enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations". Based on this we can conclude that if any enterprise is having the intention to continue the business it could be said to be a going concern. It is not necessary that all the assets and liabilities shall be transferred, it is sufficient if only those assets which are essential to continue the business are transferred, but that is being transferred should be capable of being considered as a whole or an independent part. Further, in AAR No.10/2019 given by the Advance Ruling Authority of the state of Uttarakhand in....
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.... we take upon the question for further scrutiny, whether it is a supply of goods or services or both. Part 4 (c) of Schedule II of the CGST Act, 2017 refers to the 'transfer of business assets' which reads as under: "4. Transfer of business assets (c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless- (i) the business is transferred as a going concern to another person; or" Now we examine, in the instant case, whether transaction is qualified to be business being transferred as a going concern to 'another person' or not. In terms of section 25 (4) and section 25 (5) of CGST Act, 2017. "Section 25 (4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act". "Section 25(5) Where a person who has obtained or is requ....
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....ording of Section 18 (3) makes it clear that the law permits the transfer of unutilized ITC in the electronic credit ledger only when there is: (i) change in the constitution of such registered person and (ii) such change is on account of sale, merger, demerger, amalgamation, lease or transfer of the business (iii) and in the manner prescribed. In the instant case, there is no evidence of "change in the constitution of the registered person". A change in the constitution would envisage a change from say a proprietorship entity to a Partnership or a Company, or from a Partnership to a Company; or change in the constitution of the Shareholders, etc. There is no such thing happening in this case. M/s. Shilpa Medicare Limited, Vizianagaram is one and the same entity as M/s. Shilpa Medicare Limited, Bangalore, Karnataka. There is no change in the constitution of the entity as required under Section 18 (3) of the CGST Act and therefore the provisions for transfer of ITC under Section 18 (3) would not be permissible in this case. Further, the GST law comprising of the Central GST Act, the Integrated GST Act and State / UT GST Acts, does not envisage the tr....