2019 (2) TMI 1080 – AUTHORITY FOR ADVANCE RULING, HARYANA – TMI – Levy of CGST/SGST Act – merger of entities – merger of his proprietorship firm as a going concern with a private limited company on the fixed assets and currents assets including stocks of raw material, semi-finished and finished goods – transfer of input tax credit available in the credit ledger account or cash ledger account of proprietorship firm to the respective credit ledger and cash ledger account of the private limited company, consequent upon merger – Section 18 (3) of the CGST/HGST Act, 2017.
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Held that:- It is evidently clear that there are provisions in the law, where in case of merger, a registered person, by filing Form GST ITC-02, electronically on common portal, can transfer un-utilized input tax credit lying in his electronic credit ledger to the transferee. Here it is to be noted that these provisions pertain to transfer of unutilized input tax credit. These provisions are not applicable to un-uti
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Harish Arora, Finance Manager, B.M. lndustries, Yamunanagar. 1. As per facts stated by Sh. Rajesh Kumar, Prop. M/s. B. M. Industries, 33, Industrial Estate, Phase-II, Yamunanagar (Haryana) [hereinafter referred to as the applicant ], the firm is a going concern engaged in manufacture and sale of aluminium profiles, owning fixed assets, current assets and also has long term as well as current liabilities. The applicant proposes to merge as GOING CONCERN with M/s. Bimal Aluminium Pvt. Ltd., Yamunanagar, having GSTN 06AAACB6210G1Z9. That consequent to merger the proprietorship firm M/S B. M Industries, owned by the applicant, shall cease to exist and its all present and future assets, liabilities, rights, claims, businesses, etc., shall be taken over by M/s. Bimal Aluminium Pvt. Ltd. All future liabilities of GST, as and when arise, shall be met by M/s. Bimal Aluminium Pvt. Ltd., in normal course of business. After merger, M/S B. M. Industries shall apply for cancellation of registration
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the Officer under section 98 (1) of the CGST. HGST Act 2017 The DETC (ST), Jagadhari had submitted his comments on 18.06.2018, wherein the legal provisions as contain in section 41 and section 85 of the CGST/HGST Act, 2017 have been reproduced without any observation viz a viz the facts of the case. RECORDS OF PERSONAL HEARING – 2ND PROVISO TO SECTION 98(2) OF CGST/HGST ACT 2017 4. Opportunity for personal hearing was granted to the applicant on 20.06.2018, which was attended by Sh. Pankaj Malik, Chartered Accountant, on behalf of the applicant. He made following submissions: (a). That the merger of M/s. B.M. Industries with M/s. Bimal Aluminium Pvt. Ltd. would be for consideration based on the valuation of assets & liabilities on the date of merger. Consequent upon merger of M/s. B.M. Industries all assets and liabilities shall be taken over by M/s. Bimal Aluminium Pvt Ltd and business of M/s. B.M. Industries would continue to run under the ownership of M/s. Bimal Aluminium Pvt. L
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. Bimal Aluminium Pvt Ltd. As the action of the applicant is not in the regular course of business nor it has the impact of furtherance of business, therefore, the activity cannot be termed as supply as per Section 7 e hence exempt from the payment of tax. 5. Reference was made to the provisions of Schedule II of the CGST Act 2017 specifies the activities to be treated as Supply of Goods or Supply of Services and it was submitted that as per Para 4(c) of subject schedule, transfer of business as a going concern is not treated as supply. The applicant also referred to Notification no. 12/2017-Central Tax (rate) Dated 28-06-2017. The notification exempts the intra state supply of services of description as specified in column 3 of the table from Central Tax leviable thereon under Subsection (1) of Section 9 of CGST Act 2017 as is in excess of the tax calculated at the rate as specified in the corresponding entry in column (4) of the table. As per Sr. No.2 of the said notification, servic
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ts of the Applicant as a going concern is covered under Sr. No 2 of the notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 subject to the condition that the unit is a going concern. 7. The applicant quoted the provisions of Section 18 of the CGST Act 2017 and Rule 41 of CGST Rules and submitted that Section 18(3) read with Rule 41 allows the transfer of the input tax credit shown in the account of the Applicant as balance of the Electronic Cash Ledger and The Electronic Credit Ledger to the respective ledgers of M/s. Bimal Aluminium Pvt. Limited subject to observance of conditions prescribed in Rule 41 of CGST Rules. After hearing the applicant in detail and discussions, the applicant was admitted as being covered by section 97 (2) (d) & (e) of the CGST/HGST Act, 2017. As regard merits, the decision was reserved which is being released today. DISCUSSIONS AND FINDINGS OF THE AUTHORITY 8. We have carefully gone through the facts and records of the case. On facts presented b
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r change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee: Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme. (2) The transferor shall also submit a copy of a certificate issued by a practicing chartered accountant or cost accountant certifying that the sale, merger, demerger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities. (3) The transferee shall, on the common portal, accept the details so furnished by the transferor and, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be credited to his electronic credit
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, para 4 pertain to transfer of business assets and clause (c) of para 4, provides as under: (a) 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 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. Thus, we find force in the contentions raised by the applicant that as per Para 4(c) of Schedule II to the CGST/HGST Act, 2017, transfer of business as a going concern is not treated as supply and thus, the same stands excluded from the scope of supply of goods. 10. Reference made by the applicant Notification no. 12/2017-Central Tax (rate) Dated 28-06-2017, which exempts the intra state supply of services of transfer of a going concern as a whole or an independent
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