No GST exemption on transfer of business: AAAR

Case Details: Appellate Authority for Advance Ruling, Andhra Pradesh Shilpa Medicare Ltd., In re - [2022] 136 taxmann.com 221 (AAAR - Andhra Pradesh)

Judiciary and Counsel Details

• • Peeyush Kumar and Naresh Penumaka, Member

Facts of the Case

The applicant was intending to transfer whole business as a going concern to a distinct person where both were holders of same PAN. It filed an application for advance ruling to determine taxability of transaction of transfer of whole business between distinct persons and the Authority for Advance Ruling held that such transfer of whole business would amount to supply of services and exempted under GST. The department filed appeal before the Appellate Authority for Advance Ruling and challenged the decision.

AAR Held

The Appellate Authority for Advance Ruling observed that the establishments of a person with separate registrations whether within the same State/UT or in different States/UTs are considered as ‘distinct person.’ As per Part 4 (c) of Schedule II of the CGST Act, 2017, the transfer of business assets shall be treated as supply of services if the business is transferred as a going concern to another person. In the instant case, transfer of business assets would not qualify to be a ‘ transfer as going concern to another person’ as transfer was between distinct persons. Hence, it would be treated as deemed supply of goods and GST exemption would not be available.

Case Review

• • Shilpa Medicare Ltd., In re [2020] 117 taxmann.com 806/[2021] 84 GST 68 (AAR-AP.) (para 6) reversed

List of Cases Referred to

• • Paradise Food v. State of Telangana [2017] 81 taxmann.com 331/63 GST 86 (AP) (para 5.8)
  • B.M. Industries, In re [2019] 102 taxmann.com 282 (AAR – Har.) (para 5.9)
  • Rajeev Bansal & Sudarshan Mittal, In re [2020] 116 taxmann.com 158/81 GST 329 (AAR -Uttarakhand.) (para 5.9).