Shilpa Medicare Limited Vs Union of India (Andhra Pradesh High Court)
Andhra Pradesh High Court held that transfer of entire R&D unit as a going concern, including the assets and liabilities, is sale of business and not sale/supply of individual goods under GST. Accordingly, the writ petition is disposed of.
Facts- The petitioner herein is a limited company which undertakes Research and Development in Pharmaceuticals including active pharmaceutical ingredients, formulation of molecules and manufacture of formulation products. The petitioner had one Research and Development Center situated in Karnataka State and another in Modavalasa Village, Denkada Mandal, Vizianagaram District of Andhra Pradesh. The petitioner decided to transfer its R&D Center in Vizianagaram to Bangalore. For this purpose, the Vizianagaram Unit as well as the Bangalore Unit entered into a Business Transfer Agreement, dated 26.06.2019. Under this agreement, the business assets and business liability of the Vizianagaram Unit, as a going concern, was transferred to the Bangalore Unit for Zero consideration.
After executing the agreement, the petitioner approached the Authority for Advance Ruling. The authority for advance ruling by its decision, dated 24.02.2020, had held that the transaction was a supply of services, which was covered under SL.No.2 of Notification No.12/2017-Central Tax (Rate), exempting the said transaction from tax. The authority also held in the affirmative, that the unutilized input tax credit available in the Vizianagaram Unit could be transferred to the Bangalore Unit.
