2018 (12) TMI 767 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Supply of service or not – direct transfer of BP business to MSPL and PM business to MPMPL – slump sale – related parties or not – input tax credit – notional consideration (percentage of the business transfer value) – Held that:- The Applicant has entered into a Business Transfer Agreement with Merck Ltd (seller) wherein the seller has agreed to sell, transfer, convey, assign and deliver to the applicant or to any affiliates as directed by the applicant for the BPL business which would be transferred as a slump sale on a going concern basis. The Applicant has stated that BPL business means BP business, LS business and PM business as going concern as outlined in Definitions and Interpretations.
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In respect of transfer of BP business to MSPL and PM business to MPMPL by the seller apparently it is seen and also claimed in the application by the applicant is that the applicant is only directing the seller to trans
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iving direction to the seller for transfer of BP and PM businesses to MSPL and MP MPL respectively as per his directions and terms and conditions agreeable to him due to special authority in this regard, vested in him through the first agreement dated 21.06.2018 between him and the seller.
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Levy of GST on notional consideration – Held that:- The present case involves provision of service as per para 5 (e) of Schedule II to Section 7, between related person where the applicant is stating that there is no consideration – the value is to be determined in terms of Rule 28 of the CGST Rules, 2017.
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Input Tax Credit – notional consideration (percentage Of the business transfer value) – Held that:- The value is to be determined as per Rule 28 of the CGST Rules, 2017 and therefore there is no requirement on our part to answer this question.
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Ruling:- The applicant’s direction to the seller (directed in agreement dated 21 June 2018) for direct transfer of BP business to MSPL and
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the above question is affirmative then as the parties are related, even in absence of the actual consideration does the applicant have to attribute a notional consideration and charge GST in line with schedule 1 of GST Act to be compliant? iii. If the answer to both the questions are affirmative then as the recipients (MSPL/MPMPL) are eligible to avail full input tax credit then the notional consideration (percentage of the business transfer value) would be only academic and will the invoice value be considered as open market value? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act
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einafter referred to as the MPMPL ) for direct transfer Of the BP and PM Businesses where in the applicant has only directed to seller for transfer, The applicant vide above agreements has directed the seller to transfer the BP business to MSPL and PM business to MPMPL as going concern on a slump sale basis. Accordingly, only IS Business will be sold to applicant. Refer Exhibit 2 for details of agreement. In terms of above agreement, the Seller would be receiving lump sum consideration for each slump sale of BP business, PM business and LS business independently from the MSPL, MPMPL and the applicant respectively which is exempt from GST vide serial no 2 of Notification No. 12/2017 – central tax dated 28th June 2018 as amended from time to time. Necessary intimation regarding slump sale as going concerns were filed before the regulatory authority such as National Stock Exchange of India Limited Vide letter dated 21 June 2018. Refer copy of the said intimation in Exhb 3. 2. At outset, w
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o transfer BPL business or part thereof to its affiliates. In this regard, it is relevant to refer extract of business transfer agreement between the applicant and seller which is reproduced (refer page 4) below for ease of reference: ….Subject to the terms and conditions set forth herein, the Seller hereby agrees to sell, transfer, convey, assign and deliver (as the case may be) to the purchaser (or to an affiliate of the purchasers, as directed by the purchaser) hereby agrees to purchase, take assignment and deliver of all of the sellers right, obligations, title and interest, liabilities, claims and demands whatsoever at law and in equity, in and to the BPL, business on the closing date on a slump sale basis as going concern… On perusal of above, it is evident that the purchaser (i.e. in the present case applicant) can direct to the seller for transfer of BPL business (i.e. BP business, PM business and LS business) as going concern on slump sale basis to its affiliates. As per S
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as per section 7 of GST Act which is reproduced below for reference: ….7. (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be lade for a consideration by a person in the course or furtherance of business; (b) Import of services for a consideration whether or not in the course or furtherance of business, (c) The activities specified in Schedule l, made or agreed to be made without a consideration; and…. As per Section 7 of GST Act, the term supply includes supply of goods or services or transfer etc. made or agreed to be made for a consideration by a person in the course or furtherance of business. However, in the present case, as discussed supra, there is no activity which constitute goods or service to qualify as supply between the applicant and MSPL/MPMPL. In the present case, the board of directors of MSPL/MPMPL
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UT CONSIDERATION 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 2. Supply of goods or Services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business… In the instant scenario, the applicant and MSPL/ MPMPL are related parties in terms of explanation to section 15 of GST Act. Hence, any supply of goods or services between the applicant and MSPL/MPMPL even without consideration can be considered as supply under GST Act. However, as discussed in foregoing para, there were no activity between the applicant and MSPL/ MPMPL and there is no business consideration between the applicant and MSPL/MPMPL . Hence, an independent direction by applicant to Seller for transferring a business to a related party would not qualify between the applicant and MSPL/MPMPL under GST Act. 8. Since full input tax credit is available to MSPL/MPMPL the notional co
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ed below for reference: Value of supply of goods or services or both between distinct or related persons, other than through an agent.- The value of the supply of goods or services or both between distinct persons as specified in sub-section (4) and (5) of section 25 or where the supplier and recipient are related, other than where the supply is made through an agent, shall- (a) be the open market value of such supply; (b) if the open market value is not available, be the value of supply of goods or services of like kind and quality; (c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30 or rule 31, in that order: Provided that where the goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be an amount equivalent to ninety percent of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person: Provi
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tage of business transfer agreement. D. APPLICANT S UNDERSTANDING As discussed in above Para, there were no activity between the applicant and MSPL/NIPMPL ; the applicant has directed to the Seller for transfer of business vide agreement for transfer of BP and PM business but there is no activity of supply of goods or services undertaken between the applicant and MSPL/ MPMPL ; Consideration would be received by the seller directly from MSPL/MPMPL. There will not be any types of considerations between the applicant received from N ISPL/ MP MPL . Hence, applicant s direction to seller for slump sale of BP business and PM business as going concern to its related party i.e. MSPL and MPMPL respectively without any consideration does not qualify as supply and is not subject to GST Independent of above even if it is treated as supply then the value of the consideration would be academic and the invoice value would be considered as the open market value for all GST purposes. Hence, even if a p
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x credit then the notional consideration (percentage of the business transfer value) would be only academic and will the invoice value be considered as open market value? Additional submissions by applicant. We Merck Life Science Private Limited ( Company or we or Applicant ), are registered under the Goods and Service Tax Act, 2017, vide the registration no. 27AACCM1226B1Z4. This is with reference to final hearing notice for advance ruling vide application no. 62 dated 02nd August, 2018. In this respect we wish to submit the following additional grounds to provide the justification regarding the questions for which such advance ruling is sought. A. Applicant or an affiliate of the applicant had the right to buy the BPL business. In the instant case, it is important to note that the initial business transfer agreement between the seller and the applicant was executed on 21 June 2018 which authorizes the applicant or any of its affiliate to buy the BPL business on the closing date. On t
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lling have also been made accordingly with the respective regulators. Hence, the question of the applicant parting with any rights in the second agreement does not arise at all. B. This would also not qualify under Schedule II as a service Without prejudice to submissions made herein above, it may be stated that the activity of the applicant does not fall under Schedule II, Part 5 (e) which is activity of agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. Activity of agreeing to the obligation to refrain from an act – This act is an act of abstinence for which consideration is received by the service provider (the person who abstained from doing an act) and economic benefit accrues to the recipient of service. For example, the Service Tax Guidelines dated June 2012 issued by the Central Board of Excise & Customs vide para 6.7.1 have clarified that when a person refrains from comptetion and received an anti- compete fee, then su
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ts. Such agreements stipulates the obligation in the course or furtherance of business. In the instant case, such a situation is absent. Further, the Applicant does not have an inherent right that he is relinquishing. Such right to direct sale to its affiliates emerges out of the delegation of the said authority by the affiliates. It is the right that he has acquired from the affiliates, which he is relinquishing. In case of facilitation service, an existing right is relinquished in favor of the affiliates. Here, there is no Such existing right with the applicant. It is merely an agreement for administrative convenience of all the parties involved. All the parties are involved from the very beginning and have consensus ad idem. Hence, no economic benefits accrues to the Applicant in whatsoever form. Thus, no service provided by the applicant in the course or furtherance of business. C. Slump sale is not in course or furtherance of business Historically there were disputes as to whether
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Karnataka of M/s. Rajashri Foods Private Limited, (2018-VIL-37-AAR) = 2018 (5) TMI 1651 – AUTHORITY FOR ADVANCE RULING – KARNATAKA, has clearly stated that sale of business as a going concern is not supply in the course or furtherance of business. D. Activity of directing the seller to sell to the affiliates is not a service covered by Schedule-I As per Schedule- I of CGST Act, 2017 transaction to be treated as supply even when made without consideration, includes supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: In the present case, the facilitation activity of directing the seller to sell to the affiliates are not in course of or for furtherance of business of the applicant. Section 2(17) of CGST Act defines – business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar whether or not it is for a pecuniary benef
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s the pecuniary benefit as mentioned in the definition of business and also the future benefits, indirect and not co-relatable. For example if the holding company provides service to the subsidiary company without consideration, then it fulfills the condition that the activity is not for any pecuniary benefits and hence fulfills the definition of Business as per GST law and hence said service is in course or furtherance of business. However, strictly speaking, the said service helps the subsidiary company to grow its business which results into increased outflow of dividend income to the Holding company. Hence the economic benefits accrues to the service provider in the long run but it is in distant future and also the said economic benefit is not co-relatable with the service provided by the holding company. In view of the above, if an economic benefit accrues in future and is not co-relatable with the service provided, then it would be treated as provision of service without any cons
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bsolutely FREE and still considered as provided in course of business. If that view is taken, then the implication of in course of business does not make any sense. Then there would be no difference between business and charity. Any service without economic benefit in whatsoever form, cannot qualify as in course of business. If the service provided free is considered as in course of business, then the definition of business is distorted. There cannot be an activity in course of business which does not have the economic benefit implications, directly or indirectly or immediate or in future or co-relatable or un-co-relatable. In the present case, relinquishing the right buy the business division the Merck in favour of the affiliate group companies is not for any economic benefits whatsoever, whether direct or indirect, immediate or in future or co-relatable or un-co-relatable. Department cannot prove that there is any economic benefit, whatsoever, attached to such relinquishing of the ri
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uity in the interpretation of law for the purpose of imposition of any levy, the benefit of doubt should go in favor of the assesse. In the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company & Ors, 2007 (S.C.) (ITS-336-SC-2018-CUST) = 2018 (7) TMI 1826 – SUPREME COURT OF INDIA, the constitutional bench of Supreme Court analysed issue in detail and held that ambiguity or doubtful fiscal statute must receive a construction in the favor of the assessee. Thus, in the present case also, in absence in clarity of taxability, GST Act should be interpreted in favour of the applicant and it should not be taxable service. Relying upon the decision of the Hon ble Supreme Court, in the case of Mauri Yeast India Pvt. Ltd. v. State of U.P., 2008 (225) E.L.T. 321 (S.C.) = 2008 (4) TMI 101 – SUPREME COURT, the Learned Counsel submitted that, when a commodity has been accepted to be of a particular nature by the Assessing Officer for a long time, it should remain to be class
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ance of business. In the scenario, an instruction (right to direct) to the seller to sale the business to its affiliates is not an activity in course or furtherance of business of the Applicant. Such direction in no way affect or is related to the business of the applicant. It is also not for the purpose of the continuation or performance of the business of the applicant. In course of business is like running the business and furtherance of business is like doing something for the growth of the business. Running the business and growing the business are integrally connected and an entangled phenomenal. It is not commercially or technically possible to say that slump sale is not in course of business but for furtherance of business. It is similar to saying that it is not for running the business but for growing the business. If the business itself does not exist it cannot be stated that it is in course of business or for furtherance of business. The Government of India vide exemption No
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bject and purpose of law without any contradiction or ambiguity. In the light of the above, it may be submitted that the purport of the exemption notification has to be read as to mean that it exempts services in connection with slump sale and NOT the activity of slump sale per se. This line of interpretation is in sync with the overall object and purpose of the legislation and does not give rise to any controversy or ambiguity. It is like reading the law as a whole and interpreting the same harmoniously so that effect can be given to each of the aspect and provision of the law without creating any contradiction or attrition. In case if slump sale is construed as service by way of impermissible inference as per the context of the law, still it can be stated that such slump sale is not in course or furtherance of business and will not qualify as supply of service. Further, mere exclusion of present transaction and slump sale from Schedule III – activities or transactions which shall be
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Tax Act, 2017 (IGST Act) intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account; If the facilitation service is provided by the taxpayer then the person qualifies as Intermediary. In the present case, the applicant had never arranged and facilitated transaction of slump sale to its affiliates. The slump sale was directly undertaken by the seller to MSPL and MPMPL. Only for administrative purpose two sets of agreement was entered. Hence the applicant is not qualify as an intermediary and not liable to pay tax. F. Direction by the applicant for facilitation of any non-service (in the present case slump sale). will not qualify as supply of service. It is arguable that slump sale is neither supply of goods nor supply of service. In the instant s
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e transaction in money per se, is service and hence, it is taxable. In view of the above, it may be observed that in case of any facilitation service in connection with non-service (like money or security) it is generally not a taxable service. This is all the more evident from the fact that such facilitation service is specifically included as taxable service. It is a cardinal principle of law that if an activity is specifically included as taxable service, then if Such activity is not included, then such activity would not be taxable. There is no scope for automatic inclusion by assumption / presumption / inference / implications. Hence, in order to tax activity in relation slump sale there has to be specific inclusion in the definition of service or in Schedule-II. It is evident from the GST law that there is no specific inclusion of such facilitation service / activity in connection with slump sale, in the definition of Service or in Schedule-II. Hence such activity in connection w
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qualify under Schedule Il; the transaction is also revenue neutral in the hands of the government. Without prejudice to above, in case above transactions are considered as taxable by your goodself, then the open market value should be the value declared in the invoice. Further, as the transaction would be used or is intended to be used in the course or furtherance Of business by MSPL and MPMPL Hence, both MSPL and MP MPL are eligible to claim full input tax Credit on GST charged by the applicant. Hence the discussion on the valuation would just be an academic exercise. We Merck Life Science Private Limited ( Company or we or Applicant or us ), are registered under the Goods and Service Tax Act, 2017, vide the registration no. 27AACCM1226B1Z4. This is with reference to final hearing for advance ruling vide application no. 62 dated 02nd August, 2018 attended on 19th September, 2018. In continuation to the additional submission made by us 19th September, 2018, we are hereby submitting su
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ss by seller to applicant and its affiliates, which was evident from intimation filed on 27th April, 2018 before the regulatory authorities (Refer Exhibit 1) and also in the letter dated 21st June, 2018 filed with NSE, for announcing the signing of the agreements. Based on above discussion, it is apparent that the transaction of slump sale would happen between the seller and the applicant alongwith its affiliates independently. There is no activity between the applicant and its affiliates to qualify as Supply of goods/ services under GST Act. Without prejudice to above, in case direction by applicant qualifies as an activity of agreeing to the obligation to do an act (i.e. qualify as a supply of service under schedule II of GST Act), then also in absence of consideration, GST should not be applicable. An obligation means a contractual obligation in legal parlance. In the present case, there is no contractual obligation between the applicant and its affiliates to do any act. Hence, the
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tion payable under the BTA: INR 10,520,000,000/- Stamp duty payable: Article reference under Schedule I of the Maharashtra Stamp Act Description of head under which stamp duty is payable Amount of stamp duty Article 5(h)(A)(iv)(b) Agreement which creates any obligation, right or interest and having monetary value above INR 1,000,000 0.2% of overall consideration under the BTA = 0.2% of INR 10,520,000,000 = INR 21,040,000 Article 35 Indemnity provision INR 500 Article 5(h)(B) Arbitration provision (covered under the residuary provision) INR 100 Total Stamp Duty Payable INR 21,040,600 BP and PM Transfer Agreement: Consideration payable by MSPL to Merck Limited under the BP and PM Transfer for the transfer of the BP Business: INR 6,781,500,000 Consideration payable by MPMPL to Merck Limited under the BP and PM Transfer for the transfer of the PM Business: INR 808,400,000 Stamp du ty payable: Article reference under Schedule I of the Maharashtra Stamp Act Description of head under which st
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01,00,000 58,60,200 600 0 0 58,60,800 MSPL 6,78,15,00,000 1,35,63,000 0 1,35,63,000 1550 2,71,27,550 MPMPL 80,84,00,000 16,16,800 0 16,16,800 1550 32,35,150 TOTAL 10,52,00,00,000 2,10,40,400 600 1,51,79,800 3,100 3,62,23,500 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- In this regard, applicant (M/s Merck Life Science Pvt. Ltd.) had sought Advance Ruling in respect of question number (c),(e) and (g) of point No. 4 at Para B i.e. Applicant s eligibility to file present Advance Ruling Application. In light of the facts as per (c), (e) and (g) of point No. 4 at Para B, applicant wishes to seek clarification on the following matters from the Authority for Advance Ruling established under GST Act: 1. Whether applicant s direction to the seller (directed in agreement dated 21 June 2018) for direct transfer of BP business to MSPL and PM business to MPMPL, respectively would qualify as a supply between the applicant and MSPL/MPML ? 2
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t. Ltd. and Merck Performance Material Pvt. Ltd. (different entities) and said being taxable supply. The MLSPL (applicant) appears to be liable to GST even though there is no consideration and as such the entities are related as per agreement of business transfer and transfer of BP and MP business. 3. Since MLSPL (applicant) liable to GST and being taxable supply, it seems the recipients MSPL/ MPMPL are eligible to avail full ITC even though there is no consideration, subject to condition specified in ITC Section/ Rules. 04. HEARING The case was taken up for Preliminary hearing on dt. 04.09.2018 when Sh. Gurudas Pai C.A. , Sh. Abhijit Saha, Advocate, Ms. Pooja Singh, C.A. along with Sh. Mangesh Wagle, Manager Indirect tax appeared and made oral and written submissions for admission of application. Jurisdictional Officer, Sh. B.S. Manat, Division – V, CGST, Navi Mumbai Commissionerate appeared and stated that they would be making submissions in due course. The application was admitted a
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ing concern as outlined in Definitions and Interpretations. In view of the above agreement, it is stated One agreement has been executed between the seller, M/s. Merck Ltd and M/S Merck Specialities Pvt.Ltd. (MSPL) for transfer of BP business to MSPL by and from seller. – Second agreement has been entered into between the seller (M/S Merck Ltd) and and M/s Merck Performance Material Pvt. Ltd. (MPMPL), for transfer of PM business to MPMPL by and from seller. In respect of the above two agreements, the applicant has only directed the seller to transfer these above referred business to the affiliates of MSPL and MPMPL as required, as per the terms of the first agreement between the seller and the applicant referred above. It is further stated that the applicant, vide the two agreements referred above has directed the seller to transfer the BP business to MSPL and PM business to MPMPL as going concern on slump sale basis. As a result only LS business is sold by the seller to the applicant.
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given by the applicant as per agreement dated 21.06.2018 for direct transfer of BP business to MSPL and PM business to MPMPL would qualify as a supply between the applicant and MSPL/MPMPL. To examine whether the above direction of the applicant would qualify as a supply between the applicant and MSPL/MPMPL, we refer to the scope of Supply as given under Section 7 of the CGS Act, 2017 which reads as under:- 7 (1) For the purposes of this Act, the expression supply includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule 1, made or agreed to be made without a consideration, and (d) the activities to be treated as supply of goods or supply of services as referred to in S
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to the obligation to refrain front an act or to tolerate an act or a situation or to do an act. In view of the above, first we examine the terms of the agreement dated 21.06.2018 between the applicant and the seller and then the agreement between the seller and MSPL and between the seller and MPMPL to ascertain if the act of giving direction by the applicant would fall in the scope of supply between the applicant and MSPL and MPMPL. We find that the agreement dtd. 21.06.2018 between the applicant and seller provides as under:- This agreement is made on 21st June, 2018 PARTIES (1) MERCK LTD., a company incorporated under the provisions of the Companies Act, 1956, having its registered office at Godrej One, 8th floor, Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai-400079 and corporate identity number L99999MH1967PLC013726 (hereinafter referred to as theSeller, which expression shall, unless the context otherwise requires, includes its successors and permitted assigns, an
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obligations, title, and interest, liabilities, claims and demands whatsoever at law and in equity, in and to the BPL business on the Closing date, on a Slump Sale basis as going concern. The consideration for the Slump Sale shall be discharged by payment of the consideration by the Purchaser to the Seller in accordance with clause 3 (Price) 2. PRICE 3.1 Aggregate Price : The aggregate price for the BPL business is ten billion, five hundred twenty million rupees (INR 10,520,000,000) (BPL Business Price) 3.2 The BPL business Price has been determined based on the value of the BPL business as a whole and shall be paid as a lump sum consideration for transfer of the BPI- business by the Seller to the Purchaser on a going concern basis. No values have been assigned to and of the individual assets or Assumed Liabilities comprised in the BPL business. The Parties agree that the determination of the value of any asset for the purpose of payment of stamp duty, registration fees, or other simila
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t of a termination of this Agreement pursuant to and in accordance with clause 8.1(a) or (b) or (c) (Seller and Purchaser Options to terminate), written notice thereof shall be given by the Part seeking termination to the other Party and this Agreement shall (in the event such Party had the right to terminate this Agreement hereunder) be terminated, without further action by any Party. 8.3 Effect of Termination. If this Agreement terminates or is terminated pursuant to this clause 8 (Termination), neither the Seller nor the Purchaser (nor any of their Affiliates) shall have the claim, obligation or liability of any nature against any other Party (or any of its Affiliates) under this Agreement or under any of the Surviving Provisions; provided, that nothing herein shall relieve a defaulting or breaching Party from any liability or damages out of its Wilful Breach. 11. INDEMNIFICATION 11.1 Purchaser Indemnification Obligations. The Purchaser hereby undertakes that with effect from Closin
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affiliates cannot take place without the direction of the applicant. The crucial and central position of the applicant is also very clear from the other terms of the agreement in respect of price, payments on closing, termination and indemnification clauses of the agreement as referred and reproduced above. Further, with respect to the applicant being the central pillar of these slump sale business transfer agreement would also be clear from the relevant paras of the consequent agreement to the first agreement referred above. The consequent agreement i.e Agreement for transfer of the BP and PM businesses is also dated 21.06.2018. We reproduce the relevant paras of the same which are as under:- AGREEMENTFOR THE TRANSFER OF THE BP AND PM BUSINESSES dated 21 June 2018 PARTIES: (1) MERCK LTD., a company incorporated under the provisions of the Companies Act, 1956, having its registered office at Godrej One, 8th floor, Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai-400079 a
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, Merck 2, Merck 3 together the parties and each a Party, and Merck 1, Merck 2, Merck 3 together the Merck Parties and each a Merck Party). Words and expressions used in this Agreement shall be interpreted in accordance with Schedule 5 (Definitions d Interpretations). WHEREAS Merck 1 has entered into a business transfer agreement dated on or around the date hereof with the Seller (the Business transfer Agreement) under which Merck 1 will acquire the BPL Business from Seller. WHEREAS under the Business Transfer Agreement, Merck 1 has the right to direct the Seller to transfer the BPL Business or part thereof to an affiliate of Merck 1. WHEREAS the Parties have agreed that the BPI Business shall be transferred from Seller directly to Merck 2 upon the terms set out in this Agreement. WHEREAS the Parties have agreed that the PM Business shall be transferred from Seller directly to Merck 3 upon the terms set out in this Agreement. WHEREAS the LS Business will be transferred from Seller to M
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ms and demands whatsoever at law and in equity, in and to the PM Business, as a going concern on a Slump Sale basis, simultaneously with the BTA Closing; and 3. PRICE 3.1 The Parties agree that the purchase price to be paid to Seller pursuant to clause 3.1 (Aggregate Price) of the Business Transfer Agreement shall be paid by Merck 1, Merck 2 and Merck 3 as follows:- (a) Merck 1 shall, pursuant to and in accordance with the Business Transfer Agreement, pay to the Seller the proportion Of the BPL Business Price (as defined in the Business Transfer Agreement) which relates to the LS Business, being two billion, nine hundred thirty million, one hundred thousand Rupees(INR 2,930,100,000) (the LS Business Price) together with the IS determined VAT to the extent it is due as at BTA Closing, it being understood that the LS Business Price has been determined based on the value of the LS Business as a whole and shall be paid to Seller as a lump sum consideration for transfer of the LS Business b
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Closing, it being understood that the PM Business Price has been determined based on the value of the PM Business as a whole and shall be paid as a lump sum consideration to Seller for transfer of the PM Business by Seller to Merck 3 on a going concern basis. 8. TERMINATION 8.1 options to Terminate This Agreement may be terminated at any time prior to BTA Closing: (a) by mutual written consent of Merck Parties; (b) by ant Merck Party, if BTA Closing does not occur before the Long Stop Date; (c) automatically in the event that the Business Transfer Agreement is terminated in accordance with its terms. Thus from the details above, it is reiterated and clear that the role of the applicant is very crucial in respect of both the agreements as discussed above and without the directions of the applicant, the second agreement could not have materialized and further, in respect of all the terms of the second agreement as detailed above the applicant is an active party in the agreement as well a
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consideration and charge GST in line with schedule 1 of GST Act to be compliant? In respect of Question NO. 2 we find that the present case involves provision of service as per para 5 (e) of Schedule II to Section 7, between related person where the applicant is stating that there is no consideration. In view of this in this case the value is to be determined in terms of Rule 28 of the CGST Rules, 2017. Now we come to Question No. 3 as raised by the applicant which is as under:- Question 3 :- If the answer to both the questions are affirmative then as the recipients (B{SPL/MPMPL) are eligible to avail full input tax credit then the notional consideration (percentage Of the business transfer value) would be only academic and will the invoice value be considered as open market value? In respect of this Question we find that the value is to be determined as per Rule 28 of the CGST Rules, 2017 and therefore there is no requirement on our part to answer this question. 05. In view of the ext
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