In re Cosmic Ferro Alloys Limited (GST AAR West Bengal)
Questions Raised
Whether transfer of an unit by the applicant with all the assets including taking over all the liabilities by the purchaser for a lump sum consideration would amount as supply of goods or supply of services and whether the transaction would be covered under Entry No. 2 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.
(i) The transaction of transfer of business unit of the applicant involved in the instant shall be treated as a supply of services.
(ii) The transaction would be covered under Entry No. 2 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 subject to fulfillment of the conditions to qualify as a going concern.
Held by AAR
In the instant case, admittedly the applicant has entered into an agreement which inter alia involves 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 sell his entire CRF unit where the purchaser agrees to take over the assets as well as the liabilities of the said CRF unit along with the employees and their benefits. In our view, such transfer of a unit of a 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.
