Treatment of Assets in Business transfer

Sale of a going concern by a business house will not attract Goods and Services Tax (GST), as per an order by the Authority for Advance Ruling(AAR).

The Karnataka bench of the AAR gave its ruling based on an application filed by Rajashri Foods Pvt Ltd which wanted to sell one of its units along with fixed and current assets as well as liabilities, including bank loans, for a lump sum consideration.

The AAR said that as per a government notification, any transfer of a going concern constitutes a 'supply of service' and 'nil' tax rate will apply on it.

1. But advance ruling are applicable on the applicant only and to the particular state only.
2. But as per schedule II transfer of business assets or business as going concern is treated as supply of goods.
3. Even if your father is registered or not transferring business as a going concern is not liable to charge Gst because he can claim exemption as per Notification no. 12/2017 entry no 2.
4. You as a transferee of a going business is required to get registered, but if you are making only exempt outward supply (milk) then you are not required to get registered as per section 23(1)(a) of CGST act.