Slump sale between related parties- Taxability and Valuation under GST
By: – Balasubramanian Natarajan
Goods and Services Tax – GST
Dated:- 18-6-2018<\/p>\n
Slump sale between related parties- Taxability and Valuation under GST
\nThe following questions came up for consideration before AAR-Karnataka in the case of M\/S RAJASHRI FOODS PVT. LTD-[ 2018 (5) TMI 1651 – AUTHORITY FOR ADVANCE RULING – KARNATAKA ]
\nSupply of goods and\/or services – Intent to sell unit situated at Hiriyur along with all assets and liabilities – Whether the transaction would amount to supply of goods or supply of services or supply of goods & services? – N\/N. 12\/2017-Central Tax (Rate) dated 28.06.2017 – Whether the transaction would cover under sl.no.2 of the N\/N. 12\/2017-Central Tax (Rate) dated 28.06.2017?
\nThe AAR ruled as under:
\nAAR has held that it is a supply of service
\nRuling: – The transaction of transfer of business as a whole of one of the units of the Applicant in the nature of a going conce<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ded further that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Slump sale between related parties- Taxability and Valuation under GSTBy: – Balasubramanian NatarajanGoods and Services Tax – GSTDated:- 18-6-2018 Slump sale between related parties- Taxability and Valuation under GST The following questions came up for consideration before AAR-Karnataka in the case of M\/S RAJASHRI FOODS PVT. LTD-[ 2018 (5) TMI 1651 – AUTHORITY FOR ADVANCE … Continue reading “Slump sale between related parties- Taxability and Valuation under GST”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-12266","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/12266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12266"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/12266\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nInvoice by the supplier in case of slump sale:
\nIn this case tax invoice cannot be issued. Instead he has to issue Bill of supply as per Section 31(3)( c ) as given below:
\n(c) a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed:
\nAs such the question of ITC on such transaction does not arise.
\nInput Tax Credit of ITC transferred on slump sale -On transfer of business
\nThe other issue which needs to be examined is the availability if ITC balance transferred as part of slump sale-
\nCGST Act, 2017-Section 18 (3) Where the<\/p>\n
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\n (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, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities.
\n(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 ledger.
\n (4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of account
\nAs such the transferee is entitled to the ITC transferred as part of transfer business as a going concern in the form of slump sale.
\nValuation:
\nCGST Rules 2017 – Rule 28 deals with valuation between rela<\/p>\n
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\n30. Value of supply of goods or services or both based on cost.-Where the value of a supply of goods or services or both is not determinable by any of the preceding rules of this Chapter, the value shall be one hundred and ten percent of the cost of production or manufacture or the cost of acquisition of such goods or the cost of provision of such services.
\nIn this case the following are to be noted
\n * Open market value – Slump sale is not an open market sale , since it is not normally made available In the market
\n * Each slump sale is unique and there cannot be any services of a like kind and quality
\n * The proviso is not applicable as it is not intended for further supply as such
\n * Cost of production or manufacture is not applicable
\n * Cost of acquisition is not applicable as the supply is one of ser<\/p>\n
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