GST
TRT-2025-
AAR West Bengal
Date:-22-02-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 22 February 2023
Fact –
- The Applicant, Jayesh Popat, is carrying on business as a proprietor of M/s. Vasant Jewellers and is registered under the GST Act. 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.
- 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.
Issue –
- Whether the transaction of transfer of business by way of merger of two registration/distinct person would constitute supply under GST Law?
Order –
- The AAR observed that to qualify as a “going concern”, the business must not have intention or necessity of liquidation or of curtailing materially the scale of the operations‟. In this context, the AAR mentioned that the applicant has furnished before us copy of Audit report under section 44AB of the Income-tax Act, 1961‟ related to the period from 01.04.2020 to 31.03.2021. However, the AAR said that they did not find any comments from the auditor in respect of the entity's ability to continue in operation for the foreseeable future’. Therefore, they were unable to conclude that the applicant has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations.
- It was held that the transaction of transfer of business of the applicant involved in the instant case shall be treated as a supply of services. The transaction would be covered under Serial No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 subject to fulfilment of the conditions to qualify as a going concern.
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