TaxTMI 
TaxTMI 
2020 (11) TMI 1084
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....ction conducted on 24.02.2020 by the liquidator appointed by Hon'ble NCLT under Insolvency and Bankruptcy Code 2016. Liquidator through his sale notice dated 07.02.2020, has declared that as per Regulation 32 of IBBI (Liquidation process) Regulations, 2016. he was directed by Hon'ble NCLT, Cuttack vide order dated 16.12,2019 to endeavour to sell the corporate debtor (M/s Vandana Vidyut Limited) as a going, concern. After emerging as H1 bidder in e-auction conducted on 24.02.2020, applicant received a Letter of Intent on 25.02.2020 from Liquidator in which he has proposed that GST will be charged in addition to the final bid amount. Applicant's replied via letter dated 03.03.2020 that above transaction is considered as supply of service and has been exempted from charge of GST vide Sl.No.2 of Notification No.12/2017-Central tax (Rate) dated 28.06.2017. The relevant portion of the said Notification is as under:- Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 G.S.R (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied....
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.... would be in the nature of 'transfer as a going concern' and such a transfer attracts Nil rate of GST as per SI.No.2 of the Notification No.12/2017- Central Tax (Rate) dated 28.06.2017. (iv) Transfer as a going concern would generally mean that the current business as a whole will be carried on by a different person or that there is a change in the ownership of the business. (v) Similar facts has also been established in on recent advance ruling of The Authority for Advance Ruling Karnataka of M/s Rajshri Foods Pvt. Ltd, (Advance Ruling No.- KAR ADRG 06/2018 doted 23.03.2018) wherein the Authority has upheld that transaction of transfer of one of the units of the Applicant as a going concern is covered under SI. No. 2 of the Notification Na.12/2017- Central Tax {Rate) dated 28.06.2017. (vi) Further, in the case of M/s. Rajeev Barisal & Sudershan Mittal) GST AAR Uttarakhand) Advance Ruling No.10/2019-20, dated 09.01.2020), Authority observed that transfer of a business as a going concern is the sale of a business including assets. 'Transfer of a going concern' in a simple way can be described as transfer of a running business which is capab....
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....visions under the CGGST Act, 2017. Now we sequentially proceed io discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case. 5.2 We find that the applicant is seeking advance ruling on the above issues, based on the decision of Hon'ble National Company Law Tribunal, Cuttack bench, Cuttack dated 16.12.2019 in the case of IA no. 82/CTB/2019 arising out of CP(113) no. 219/MB/2018 in the matter of INSOLVENCY AND BANKRUPTCY CODE, 2016 in an application under Section 33 (1) (a) read with Section 33 (2) of the Insolvency and Bankruptcy Code, 2016 and in the matter of Mr. Sanjay Gupta, AAA Insolvency Professional LLP, E-IOA, KaiIs & Colony, Delhi-1 10 04 in the matter of Directors of the MIS. VANDANA VIDI-IYUT LIMITED i.e. (i) Mr. Prahalad Agarwal, Vandana Bhawan, M.G Road. Raipur - 492 001, (ii), Jami Koteshwor Rao, GM Commercial, Room No. 2, Guest House, Vandana Vidhyut Limited Sector- B. Sirigitti Industrial Area, Bilaspur- 495 004, Chhattisgarh, (iii). Ramawtar Agarwal, Vandana Bhawan, M.G. Road, Raipur- 492 001, inter-alia ordering therein liquidation of the Corporate Debtor viz. M/s. VANDANA VIDHYUT LIMITED and further d....
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....2017 with retrospective effect 01-07-2017 in place of clause (d) of sub-Section (1) of Section 7, which seeks to levy tax on certain declared "supply" of goods or services referred to in Schedule II of the CGST Act, 2017. Thus SCHEDULE II specifies / distinguishes the activities or transactions which are to be treated as supply of goods or supply of services. For ease of reference, the provisions of Section 7 of CGST Act, 2017 and activities excluded as specified under Schedule III to Section 7 supra ore reproduced hereunder:- Section 7 of CGST Act, 2017 defines Scope of supply as under:- (1) For the purposes of this Act, the expression "supply" includes-- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business 1[and]; (c) the activities specified in Schedule I, made or agreed to be made without a consideration 2[****]; (d) [****] &....
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....or a consideration the usage or making available of such goods is a supply of services; (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. Supply of services The following shall be treated as supply of services, namely:- (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation.-For the purposes of this clause- (1) the expression "competent authority" means the Government or any authori....
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....en that when a company goes into liquidation its assets are sold to repay creditors. The company name remains live on Companies House but its status switches to 'Liquidation'. Insolvent liquidation occurs when a company cannot carry on for financial reasons. 5.8 For the sake of brevity, we are reproducing herewith the order portion of Hon'ble National Company Law Tribunal, Cuttack bench, Cuttack dated 16.12.2019 in the instant case of IA no. 82/CTB/2019 arising out of CP(113) No. 219/MB/2018 in the matter of INSOLVENCY AND BANKRUPTCY CODE, 2016. i. This Adjudicating Authority orders for liquidation of the Corporate Debtor viz. M/S. VANDANA VIDHYUT LIMITED. ii. This Adjudicating Authority appoints the Resolution Professional viz., Mr. Sanjay Gupta as Company Liquidator, who shall issue a public announcement stating therein that the Corporate Debtors is in liquidation, in one of the leading English newspaper as well as one in vernacular newspaper having wide circulation where the registered office of the Corporate Debtor is situated as per Section 33(1) (b) (ii) of the Code read with Reg. 12 (1) of IBBI (Liquidation Process) Regulations, 2016. ....
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.... out of CP(18) No. 219/MB/2018 by the Resolution Professional under Section 33 (1) (a) read with Section 33 (2) of The Insolvency and Bankruptcy Code, 2016 for initiation of the Liquidation Proceedings against the Corporate Debtor viz., M/s. VANDANA VIDHYUT LIMITED stands disposed off. xiii. The Registry is directed to send a copy of this Order to the Company Liquidator, Financial Creditor and the Corporate Debtor, concerned ROC and to the IBBI, New Delhi by Speed Post as well as by E-mail with immediate effect for information and compliance. 5.9 Accordingly Sale Notice dated 7.2.2020 for sale of assets and properties owned by Mis Vandana Vidhyut Limited (in Liquidation) forming part of Liquidation Estate formed by the Liquidator under Insolvency and Bankruptcy Code. 2016 through e-motion on 24.2.2020, was issued by the said Liquidator appointed by Hon'ble NCLT. Details being as under:- Assets Manner of Sale Block Reserve Price (In Rs.) EMD Amount (In Rs.) Incremental Value (In Rs.) Company as a whole (Thermal Power Plant-2x135 MW Capacity) As going concern A 607.95 Cr. 30.00 Cr. 5.00 Cr. Biomass Power Plant (8 MW Capacity) As a....
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....tangible fixed assets (electrical installation and office equipment) and stock (and more particularly described herewith in the annexed Schedule) of the Corporate Debtor through e-Auction in favor of the applicant, Shikhar Commodities, ("Purchaser"), which is in the custody of the Liquidator as provided under Section 35(1)(b) of the Code and handed over the delivery and possession of the scheduled property to the purchaser. The Liquidator hereby acknowledges that the above mentioned property has been sold to the Purchaser against receipt of Rs. 17,35,00,000/- (seventeen crore thirty five Iacs only) ("sale price") through RIGS, being the full and final consideration for the aforesaid sale. The Schedule to the said certificate detailed the description of the said asset consisting of leasehold land & properly, plant, machinery and building thereon, control room, rice husk yard, guest house, administration block workshop, weigh badge, time office, temple, DM plant, coal shed, automobile shed, service centre, weighing machine, turbine, cooling tower, boiler etc., furniture, cctv, geysers, electrical installation etc. along with stock of coal and rice husk of the said Biomass Division....
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....porate debtor as a going concern". Thereafter, consequent to the amendment dated on 22.10.2018 made to the regulations supra, Regulation 32 reads as under: The liquidator may- (a) sell on asset on a standalone basis; (b) the assets in a slump sale: (c) a set of assets collectively; (d) the assets in parcels; (e) sell the corporate debtor as a going concern; or (f) the business(s) of the corporate debtor as a going concern: "Going concern" is an established accounting notion, and one of the fundamental assumptions in preparation of financial statements. "Going concern", as an accounting notion, is defined in Accounting Standard as follows: 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. To transfer a business as a going concern, there are certain pre-requisites in absence of which such a transfer would amount io a mere sale or transfer of individual assets or liabilities. The conditio....
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....clause 4 (a) categorically stipulates that where goods forming part of the assets of a business are transferred or disposed of by or under the direction of the person carrying on the business so as no longer to form part of those assets, such transfer or disposal is a supply of goods by the person. Thus disposal of goods forming part of assets have been categorically stipulated under clause 4(a) of Schedule II to Section 7 of CGST Act, 2017 as supply of goods. Whereas, clause 4(c) of the said schedule II to Section 7 of the CGST Act, 2017 specifically stipulates that the transfer of a business as a going concern does not constitute a supply of goods. As per the definition of services, anything other than goods is called a service. Hence, only business transferred as a going concern is excluded from the list of supply of goods and not sale/disposal of goods forming part of corporate debtor's assets. Thus it is of utmost importance to determine, as per the provisions of law, the nature of such supply, viz. the supply in question is supply of goods or supply of services. The claimed benefit of tax exemption by the applicant, under Notification No. 12/2017-Central Tax (Rate) dat....
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....inant element of a composite supply and to which any other supply forming port of that composite supply is ancillary; Section 2 (74) of CGST Act, 2017 defines "mixed supply" means two or more individual supplies of goods or services, or any combination thereof, mode in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. As per section S of CGST Act, 2017, tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply: and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. 5.18 To decide whether on exemption notification is applicable or not, inter alia requires pre-determination as to whether the supply is covered under the classification and description given in the Notification. Thus, the benefit of the said notification as stipulated under SI.No.2 of the Notification No.12/2017- Central Tax (Rate) dated 28.....