TaxTMI 
TaxTMI 
2022 (4) TMI 1087
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....aw? 3. Whether merger between distinct persons would qualify as 'transfer of business as going concern' under the purview of GST Law? 4. Whether the transaction of transfer of business by way of merger of two GST registrations/ distinct persons would constitute 'supply of services' under the GST law? 5. If the transaction qualifies as 'supply of services', whether the said transaction would get covered under SI. No. 2 of Notification no. 12/2017-C.T. (R) dated 28.06.2017, and therefore not liable to GST? 6. Whether Nagpur registration can file Form GST ITC-02 and transfer unutilized credit balance to Akola registration? 7. In case the Applicant merges the business of Akola registration, then can the Applicant claim credit balance appearing in Akola registration via Form GST ITC 02A in Nagpur registration? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to....
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....ior to surrender of the registration. B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW 2.4 Whether the transaction of transfer of business by way of merger of two GST registrations/ distinct persons would constitute 'supply' under the GST law? 2.4.1 In the given case, all the conditions mentioned under the definition of supply as per Section 7(1) of CGST Act, between two distinct persons, are getting satisfied and accordingly transaction of transfer of business by way of merger qualifies as supply under GST. 2.5 Whether the transaction of transfer of business by way of merger of two GST registrations/distinct persons would constitute 'supply of goods' under the GST law? 2.5.1 In light of the Section 7(1) of amended CGST Act & Part 4(c) of Sch.-II, Applicant submits that, in a case of transfer of business happening on a going concern basis, there is no "supply of goods". 2.6 Whether merger between distinct persons would qualify as 'transfer of business as going concern' under the purview of GST Law? 2.6.1 Since the term, 'going concern' is not defined in the GST legislation, applicant relies on various judicial pronouncements in this regard to understan....
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....no. 12/2017-CTR dated 28.06.2017, and therefore not liable to GST? 2.8.1 As per SI. No. 2 of Notification No. 12/2017-C.T.(R) dt 28.06.2017, services by way of transfer of a going concern, as a whole or an independent part thereof attracts 'Nil' rate of tax. Hence, transfer of business from Nagpur registration to Akola registration is on a going concern basis and accordingly the said transaction would attract Nil rate of tax. 2.8.2 Applicant relies on the Advance Ruling in the case of Shilpa Medicare Limited [AAR No. 05/AP/GST/2020 dated 24 Feb 2020], wherein it was held that transfer of business was a supply though exempted under Notification No. 12/2017-CTR dt 28.06.2017, transfer of ITC was allowed. 2.9 Whether Nagpur registration can file Form GST ITC-02 and transfer unutilized credit balance to Akola registration? 2.9.1 Section 18 (3) of CGST Act enables a registered person to transfer ITC, on transfer of business. rom a perusal of the said Section 18(3), it is seen that firstly, change in the constitution of registered persons denotes a bi-lateral transactions, involving two entities and secondly, the provisions uses the expressions sale, merger, de-merger, amalga....
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....the Transferor (i.e. Nagpur registration) and Transferee (i.e. Akola registration) in the present case, respectively, the Applicant should be eligible to transfer ITC in Form ITC-02. 2.10 In case the Applicant merges the GST registrations by way of transferring the business of Akola registration with Nagpur registration, then can the Applicant claim credit balance appearing in Akola registration via Form GST ITC 02A in Nagpur registration? 2.10.1 Notwithstanding anything stated above, Applicant submits that even if said transaction does not qualify as a transfer of business under going concern as per GST provisions, applicant should be allowed to merge both its registrations & transfer the credit in terms of Rule 41A of CGST Rules. 2.10.2 As per Section 25(2) of CGST Act, a person seeking registration shall be granted a single registration in a State or Union Territory. However, as per proviso to Section 25(2) of amended CGST Act, a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to prescribed conditions. However, if a registered person has availed such benefit in terms ....
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....nt are in the nature of repetitions of submissions made earlier and are not reproduced for the sake of brevity. 3. CONTENTION - AS PER THE CONCERNED OFFICER: Officer Submission dated 15.03.2022- "Whether the transaction of transfer of business by way of merger of two GST registrations/ distinct persons would constitute 'supply' under the GST law? 3.1 As per Sr. No. 2 of Schedule I & Section 7 (c) of the CGST Act 2017, supply of goods or services or both between related persons or between distinct persons as specified in section 25(4) of CGST Act, 2017, when made in the course or furtherance of business shall be treated as supply even if made without consideration. Whether the transaction of transfer of business by way of merger of two GST registrations/ distinct persons would constitute 'supply of goods' under the GST law? 3.2 As per Section 7(1A) of amended CGST Act 2017, and Part 4(c) of Schedule II, it is understood that if a business is transferred as a going concern, it does not amount to supply of goods. Whether merger between distinct persons would qualify as 'transfer of business as going concern' under the purview of GST Law? 3.3 The term 'going con....
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.... the fact that there are two separate registrations of the Transferor (i.e. Nagpur registration) and Transferee (i.e. Akola registration) in the present case, respectively, the Applicant appears to be eligible to transfer ITC in Form ITC-02 In case the Applicant merges the GST registrations by way of transferring the business of Akola registration with Nagpur registration, then can the Applicant claim credit balance appearing in Akola registration via Form GST ITC 02A in Nagpur registration? 3.7 in view of Rule 41 of CGST Rules, 2017, considering the fact that there are two separate registrations of the Transferor (i.e. Akola registration) and Transferee (i.e. Nagpur registration), the Applicant appears to be eligible to transfer ITC in Form ITC-02." 04. HEARING 4.1 Preliminary e-hearing was held on 18.01.2022. The Authorized representatives of the applicant, Shri. Dhruv Gupta CA and Shri. Shivarajan Kallyanaraman were present. Jurisdictional officer was absent. Application is filed by Nagpur unit & question No. 7 asked is about transfer of Akola unit to Nagpur. Since in that case Akola unit will be supplier, application for the question No.7 ought to have been filed by....
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....ion'. Also, as per Sr. No. 2 of Schedule I to the CGST Act, 2017, 'supply of goods or services or both between related persons or between distinct persons as specified in section 25 of CGST Act, 2017, when made in the course or furtherance of business shall be treated as supply, even if made without consideration'. Section 7(1A) of amended CGST Act 2017, mentioned as above, prescribes that, certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. Part 4(c) of Schedule II is reproduced as under: -"4 (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 ii) the business is carried on by a personal representative who is deemed to be a taxable person." 5.4.4 In view of the above, we have no doubt that; there is a ren....
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.... they are merely distinct persons. As discussed above, in view of statutory guidance as per Section 18 (cited supra), the change in constitution of the business is essential otherwise, it cannot be said that there is transfer of business as a going concern. 5.5.5 Hence, the provisions of Para 4 (c) of Schedule II of CGST Act, 2017 do not apply in this case. Therefore, the impugned supply will be treated only as supply of goods and therefore there is no supply of services in the instant case. 5.5.6 The applicant has relied on the Ruling given by the Advance Ruling Authority for Andhra Pradesh in the case of M/s Shilpa Medicare Limited [AAR No. 05/AP/GST/2020 dated 24 Feb 2020], (wherein it was held that transfer of business was a supply of services though exempted under Notification No. 12/2017-CTR dt 28.06.2017, transfer of ITC was allowed), to contend that in the subject case the supply is of services, exempted under Sr. No. 2 of Notification No. 12/2017-CTR dt 28.06.2017. The said Authority also held that the activity is a going concern and classified it to be a supply of service. 5.5.7 We find that the above said order in the case of M/s Shilpa Medicare Limited (AAR No.....