TaxTMI 
TaxTMI 
2022 (5) TMI 181
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....al Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be engaged in manufacturing of Ferro alloys and Cold Rolled Formed Sections having its factories at Barjora (hereinafter referred to as the "FERRO Unit") and Singur (hereinafter referred to as the "CRF Unit/ CRF business") respectively. It is submitted that the entire operations of the applicant are segmented in the said two units i.e. FERRO Unit and CRF Unit and both the units are functional and running independently. 1.3 The applicant intends to sell its CRF unit as a ....
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....hout any hindrances and or stoppages. 2.5 The applicant submits that the BTA dated 19.01.2022 establishes the intent of the purchaser and seller to conclude the transaction for sale/purchase of one independent selfsustained unit of the seller along with its liabilities and employees. The purchaser intends to continue with the same business as the unit is presently involved in i.e. manufacturing of Cold Rolled Forms. 2.6 The applicant's interpretation of Law is that the transaction contemplated being sale of an independent unit is a supply of service as a going concern and in view of the Entry No 2 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, the said transaction is to be charged at 'NIL' rate of tax. 2.7 The contentions of the applicant are summarized as under: • The first aspect to be established is whether the sale contemplated is as a going concern. The concept of going concern has been defined in Accounting Standards - 1 issued by ICAI which states that a fundamental accounting assumption is that of 'Going Concern' according to which "the enterprise is normally viewed as a going concern, that is, as continuing in operation....
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.... considered as sale by way of transfer of an independent business unit as a going concern. 2.9 For the purpose to determine whether sale as a going concern constitutes a supply of services under section 7 of the GST Act, the applicant has referred clause (d) of sub-section (1) of section 7 along with clause 4(c) of Schedule II as under: 7. (1) For the purposes of this Act, the expression "supply" includes-- (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.' Clause 4(c) of Schedule II: Transfer of business assets 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) ************* ************ Referring the aforesaid legal provisions of the GST Act, the applicant submits that from the construction of the wordings in 7(1)(d and Schedule II(4)(c), it can be said that an except....
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....ly appears to attract 'NIL' rate of Tax in terms Entry vide serial- 2 of Notification No". 12/2017 Central Tax Rate dated 28.06.2017 [Corresponding SGST Notification- 1136-F .T. Dated: 28.06.2017] 4. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorised advocates of the applicant during the course of personal hearing. We have also considered the submission made by the officer concerned from the Revenue. 4.2 The fact of the case as we find is that the applicant has entered into a 'Business Transfer Agreement' (BTA) intending to sell of his CRF unit as a whole with assets and liabilities to Cosmic CRF Limited. 4.3 The relevant clauses of the BTA are reproduced herein under: • "Business" shall mean CRF Unit located at Vill-Ajabnagar, P.O.-Molla Simla, DistSingur, PIN-712409 and shall include all of the Assets, Employees, Liens and Liabilities collectively. [Clause 5 of Part A of Schedule 'A'] • "Employees" shall mean the persons employed by the Seller hereto in CRF Unit. [Clause 8 of Part A of Schedule 'A'] • Fixed Assets: a. All assets....
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....he period from the date of this Agreement and up to the Closing date (Standstill period), the Seller agrees that it shall o carry on the Business in the Ordinary Course of Business in substantially the same manner as heretofore conducted; o pay its debts and Taxes when due in respect of CRF unit; o pay or perform other obligations as and when due; o preserve intact the Business, keep available the services of its present Employees, if the employees do not leave at their own will; o preserve its relationship with, customers, having business dealing with it, to the end that its ongoing ability to provide services shall be unimpaired at the Closing; and o Provide all documents and support as may be required for the purpose of due diligence by the Purchaser and its Bankers. [Clause 7] • Non- competitions (a) The Seller agrees that on and after Closing it shall not, and shall cause its promoters not to, engage, directly or indirectly in any of the following activities: (i) The Seller shall not be entitled to engage in any business competing with the activities of Purchaser in respect of exiting CRF Busi....
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.... of financial transaction 'going concern' has the meaning that at the point in time to which the description applies, the business is live or operating and has all parts and features necessary to keep it in operation." 4.10 The term 'going concern' is not defined under the GST Act or rules framed there under. The applicant has submitted that the concept of going concern has been defined in Accounting Standards - 1 issued by ICAI which states that a fundamental accounting assumption is that of 'Going Concern' 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". 4.11 We also find that in 'Taxation of Service: An Education Guide' published by the Central Board of Excise & Customs, Para 7.11.15 reads as follows: • What does the term "transfer of a going concern‟ mean? Transfer of a going concern means transfer of a running business which is capable of being carried on by the purchaser as an independent bu....