Innovative Textiles Limited – 2019 (24) G.S.T.L. 480 (A.A.R. – GST – Uttarakhand)

Transfer of business as a going concern on slump sale basis is exempt under GST

Facts: The applicant is engaged in manufacturing and selling of textile yarns, fabrics, and garments. The applicant intends to sell their ongoing business of manufacturing, marketing and sale of textile yarn and fabrics, situated at Sitarganj to M/s. SD Polytech (P) Ltd (“the purchaser”), in the form of business transfer as a going concern on a slump sale basis as a whole with all assets and liabilities.

The purchaser has agreed to purchase “Sitarganj Business” as a going concern with all assets and liabilities on slump sale basis on the terms and conditions as set out in the business transfer agreement.

Issue: Whether business transfer agreement as a going concern on slump sale basis is exempt from levy of GST, in terms of Notification No. 12/2017.

Held: The Hon’ble AAR, Uttarakhand observed that the acquisition of goods or services for commencement of business is covered in definition of business under Section 2(17) of the CGST Act, 2017. Therefore, the authority held that the transfer of business as a going concern on slump sale basis, is exempt from levy of GST as per Sr. No. 2 of Notification No. 12/2017.

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