In re Maheshwary Ispat Limited (GST AAR West Bengal)
West Bengal Authority for Advance Ruling (AAR) recently addressed the issue of GST applicability on the sale of assets during the liquidation process of Maheshwary Ispat Limited. The company is currently undergoing liquidation, with Mr. Santanu Brahma appointed as the liquidator by the National Company Law Tribunal (NCLT), Kolkata. The applicant sought clarification on whether the sale of assets under liquidation constitutes a supply under GST law and whether the liquidator is required to obtain GST registration.
The AAR examined relevant legal provisions, including Section 7 of the Central Goods and Services Tax (CGST) Act, 2017, which defines “supply,” and Section 24, which mandates compulsory registration in certain cases. The authority also referred to Notification No. 11/2020-Central Tax and Notification No. 439-F.T. under the West Bengal GST Act, which outline GST compliance requirements for companies undergoing insolvency proceedings. The liquidator had attempted to obtain GST registration but faced technical challenges due to the system requiring at least two promoters or partners, a requirement difficult to fulfill in liquidation scenarios.
The ruling referenced a similar decision in Mansi Oils and Grains Pvt. Ltd. (Order No. 02/WBAAR/2021, dated 29.06.2020), where it was determined that assets sold by an NCLT-appointed liquidator constituted a taxable supply under GST. Applying the same principle, the AAR held that the sale of Maheshwary Ispat Limited’s assets falls within the scope of taxable supply under GST. Consequently, the liquidator is obligated to obtain GST registration and comply with tax collection and filing requirements, even though technical difficulties exist in the registration process.
