TaxTMI 
TaxTMI 
2023 (1) TMI 78
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....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 carrying on business as a proprietor of M/s. Vasant Jewellers and is registered under the GST Act having GSTIN 19AJQPP3457M1ZA. The applicant carries another business under the same trade name as a partner and the said partnership firm is also registered under the GST Act having GSTN 19AAUFV1123F1Z0. It is submitted that the applicant proposes to merge with the partnership firm as a going concern with all assets and liabilities to be transferred to the partnership firm and such transfer of business shall take place....
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.... heretofore conducted; • pay its debts and Taxes when due; • pay or perform other obligations as and when due; • preserve intact the Business, keep available the services of its present employees, if the employees do not leave at their own will; • 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 • Conduct business to ensure continuity 2.2 In terms of the Memorandum of Understanding, all rights, title, ownership, interest in and to the business, assets, and customers including liabilities will get transferred as a going concern. In short, the entire business will be transferred. The proprietorship firm will cease to exist after filing all the necessary returns and all necessary compliance will be undertaken before surrendering the registration. 2.3 The applicant submits that all present and future assets, liabilities, rights, claims, employees, businesses, etc., shall be taken over by M/s Vasant Jewellers partnership firm. All future liabilities of GST, as and when arise, shall be met by tran....
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....dras High Court in the matter of Deputy Commissioner, (CT) v. K. Behanan Thomas, 1977 (39) STC 325 (Madras) wherein the Hon'ble Court held that transfer of business does not constitute sale of goods. 2.8 The applicant further submits that according to him, transfer of business in the form of merger would constitute supply of services and reference may be drawn to the following provisions of the GST Act where the activities of transfer of business has been mentioned: Section 18(3) GST Act: 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. Section 22(3) GST Act: (3) Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the tra....
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....from the construction of the wordings in the aforesaid sections of the GST Act, it appears that 'transfer of business' is more of an event in pursuance to a business arrangement. Moreover, taking the cue from the Sl no. 2 of Notification 12/2017 which has been issued in exercise of powers granted by Section 11(1) of the GST Act, it may be held that business is service and transfer of business is supply of service. 2.9 The applicant submits that 'services by way of transfer of a going concern, as a whole or an independent part thereof' is exempt from payment of tax vide serial number 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 which also denotes that any transfer of a going concern is a supply of service. In the present case, it is very much clear that the transaction of transfer of business will be supply of services and there is complete transfer of all present and future assets, liabilities, rights, claims, employees, businesses, etc. that is operating, managing and continuing the business. Hence, it is a permanent transfer of whole of the business. In the case of State of Tamil Nadu vs. T.M.T. Drill (Private) Limited (1991 (082) STC 0059 Madras), it w....
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....will get transferred as a going concern and the proprietorship firm thereafter shall cease to exist. Further, all present and future assets, liabilities, rights, claims, employees, businesses, etc., shall be taken over by the partnership firm and all future liabilities of GST, as and when arise, shall be met by the transferee, in the normal course of business. 4.3 The applicant has submitted that the instant transfer of business pursuance of the MOU can be considered as a supply of services and qualifies for exemption under Sl. No.2 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. In the instant case, admittedly the proposed transfer of business involves inter alia transfer of goods forming part of the assets of the business. In a standalone manner, such transfer shall be treated as supply of goods in terms of clause (a) of Entry No. 4 of Schedule II. However, here the applicant intends to transfer his entire proprietorship business where the transferee agrees to take over the assets as well as the liabilities of the said transferor concern along with the employees and their benefits. In our view, such transfer of business cannot be treated as supply of goods ....
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....g 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". 4.9 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 business, but shall not cover mere or predominant transfer of an activity comprising a service. Such sale of business as a whole will comprise comprehensive sale of immovable property, goods and transfer of unexecuted orders, employees, goodwill etc. Since the transfer in title is not merely a transfer in title of either the immovable property or goods or even both it may amount to service and has thus been exempted. 4.10 In the matter of Innovative Textiles Ltd, the Uttarakhand Authority for A....