In re Jayesh Popat (GST AAR West Bengal)
Whether the transaction of transfer of business by the applicant shall be treated as a supply of services and would be covered under Serial No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017?
It therefore appears 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, we like to mention 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, we do not find any comments from the auditor in respect of the entity’s ability to continue in operation for the foreseeable future’. We are, therefore, unable to conclude that the applicant has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations.
In view of the above discussions, AAR rule 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 [corresponding West Bengal State Notification No. 1136 F.T. dated 28.06.2017] subject to fulfilment of the conditions to qualify as a going concern.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL
1.1 At the outset, we 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 has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:-
(a) Whether the transaction of transfer of business by way of merger of two registration/distinct person would constitute supply under GST Law?
(b) Whether the transaction would amount as supply of goods or supply of services?
(c) Whether the transaction would be covered under Entry No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017?
(d) If the answer is negative, then whether GST is leviable on the transfer of existing stock (closing stock) assets, others etc. from proprietorship concern to the Partnership concern?
1.4 The aforesaid questions on which the advance rulings are sought for are found to be covered under clause (a), (b), (e) and (g) of sub-section (2) of section 97 of the GST Act.
1.5 The applicant states that the question raised in the application has neither been decided by nor is pending before any authority under any provision of the GST Act.
1.6 The officer concerned from the revenue has raised no objection to the admission of the application.
1.7 The application is, therefore, admitted.
2. Submission of the Applicant
2.1 The applicant submits that the proposed transaction of transfer of business by way of merger will be implemented by entering into an internal Memorandum of Understanding (MOU) between the two parties, which includes the below mentioned clauses:
Transfer of Assets and Liabilities,-
