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whether t/f of business as going concern is SUPPLY? pls ans with details of relevant provision.

CA Paras Ahuja (Associate Chartered Accountant) (54 Points)

01 July 2018

Section 7 of CGST Act

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Deepak Gupta (CA Student) (15922 Points)
Replied 01 July 2018

Transaction of transfer of business as a going concern amounts to supply of service and it is an EXEMPTED SUPPLY covered under Sl. No. 2 of Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 and Notification No. 9/2017 - Integrated Tax (Rate) dated 28/06/2017.

u/s 7(1)(c) certain transaction shall be treated as supply as mentioned in Schedule II, but Sl. No. 4(b)(c) of Schedule II, excludes transfer of business as a going concern.

"where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be a taxable person."

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 01 July 2018

1. In case of transfer

As per schedule II

Transfer of business assets [a] where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;

But in 4 (c)(1) of schedule Ii says will not be a deem SUPPLY if such business being transfer as going concern to another person

2ndly

if there is any balance in electronic credit ledger can tranfer by filing ITC02

As per section 18(3) cgst act
Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed.

Shivam RC (Student) (23683 Points)
Replied 01 July 2018

As per Para 4 (c) of SCHEDULE II of CGST Act 2017,

"Where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless—

[i] the business is transferred as a GOING CONCERN to another person; or

[ii] the business is carried on by a Personal Representative who is deemed to be a taxable person.

Hence, Transfer of Business as a GOING CONCERN will not be treated as a Deemed Supply.

CA Paras Ahuja (Associate Chartered Accountant) (54 Points)
Replied 01 July 2018

thnaks all,
but it is not clear to me whether it is a suppy?
It is clearly mentioned that it is not a deemed supply then which provision makes it a supply. As para 4(c) specifically excudes it from deemed supply!