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accountability of VAT

Revathi (MBA Pursuant) (109 Points)

26 October 2009

Company A has a liability to pay VAT to company B and in the mean while company C acquires 100%of shareholdings of company A. now who shall company B approach to claim the VAT and please let me know the section which specifies the same. please respond ASAP.

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2 Replies

Gautam Joshi (Partner) (361 Points)
Replied 26 October 2009

Hi Revathi,

VAT Law is state wise you must be knowing. I believe all legislations will have similarity when it comes to aquisition and levy in that regard.

Considering your company is in dealing in Gujarat, Gujarat VAT Act 2005 is having a section 27 where certificate of registration is to be cancelled if the business is transfered.

New company has to take fresh registration after acquisition. Cancellation of registration of transferor will end on application itself. (Section 27(3) of GVAT 2005)

Regarding your query of who will pay tax in this transfer read Section 27(10) of GVAT 2005 that cancellation of certification of registration will not effect the tax liability of any dealer meaning by transferee company has to pay it. What you can do it, get it reimbursed by Transferrer company either by voluntorily or putting a clause in the acquisition agreement.