TaxTMI 
TaxTMI 
2023 (1) TMI 78
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....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 without any consideration. 1.3 The applicant....
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.... 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 transferee, in the normal course of business without any hindrances or stoppages. After the merger, M/s. Vasant Jewellers (Proprietorship Concern) shall apply for cancellation of registration as prescribed. 2.4 The ....
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....ccording 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 transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. Section 85(1) GST Act: 85. (1) Where a taxable person, liable to pay tax under this Act, transfers his business in whole or in par....
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.... 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 was held that for a business to be considered as sold as a whole/going concern, it is important that all assets of the business should be transferred. The concept of transferring a company as a going concern was examined by the Delhi High Court in the landmark judgement of Indo Rama Textile Ltd (2013) 4 Comp 141 (Del). In this case Delhi High Court hel....
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....e 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 since business cannot be said to be a movable property so as to qualify as 'goods' as defined in clause (52) of section 2 of the GST Act. Further, anything other than goods, money and securities falls within the meaning of 'services' as defined in clause (102) of section 2 of the GST Act. 4.4 The applicant, in support of his contentions that the instant transfer of his....
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....hed 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 Advance Ruling (Ruling No. 20/2018-19 dated 26.03.2019) has observed that 'a transfer of a business as a going concern is the sale of a business including assets. In terms 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.' 4.11 In the case of Indo Ra....