In Re: M\/s. B.M. Industries
GST
2019 (2) TMI 1080 – AUTHORITY FOR ADVANCE RULING, HARYANA – 2019 (22) G. S. T. L. 293 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, HARYANA – AAR
Dated:- 29-6-2018
AAR No. HAR\/HAAR\/R\/2018-19\/02 (In Application No. 1\/2018-19)
GST
SANGEETA KARMAKAR AND VIJAY KUMAR SINGH, MEMBER
\nPresent for the Applicant: Pankaj Malik, CA & Sh. Harish Arora, Finance Manager, B.M. lndustries, Yamunanagar.
\n1. 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<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n te limited company on the fixed assets and currents assets including stocks of raw material, semi-finished and finished goods. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n business. The selling of business is not the business of the applicant. It, in fact, cannot be called a transaction in the normal course of business or for furtherance of business. It is an extraordinary activity which shall bring the business to an end in the hands of the applicant although it will continue to operate with regularity and permanently in the hands of the buyer i.e. M\/s. 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n circumstances of the Rajashri foods (P) Ltd case, hence the ruling is fully applicable to the applicant's case. The Ld. Advance Ruling Authority, Karnataka has given the ruling that:- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed.” = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n is further observed that Section 7 of the CGST\/HGST Act, 2017, defines the scope of supply, which includes sale, transfer, barter, exchange made for a consideration in the course of or for furtherance of business and also provides vide clause (d) to sub-section (1) that the activities to be treated as supply of goods or services as referred to in Schedule ll. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s. B.M. IndustriesGST2019 (2) TMI 1080 – AUTHORITY FOR ADVANCE RULING, HARYANA – 2019 (22) G. S. T. L. 293 (A. A. R. – GST)AUTHORITY FOR ADVANCE RULING, HARYANA – AARDated:- 29-6-2018AAR No. HAR\/HAAR\/R\/2018-19\/02 (In Application No. 1\/2018-19) GSTSANGEETA KARMAKAR AND VIJAY KUMAR SINGH, MEMBER Present for the Applicant: Pankaj Malik, CA & … Continue reading “In Re: M\/s. B.M. Industries”<\/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-16865","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16865","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=16865"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16865\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nb) Whether the input tax credit available in the credit ledger account or cash ledger account of proprietorship firm shall be transferred to the respective credit ledger and cash ledger account of the private limited company, consequent upon merger.
\nComment of the Officer under section 98 (1) of the CGST. HGST Act 2017
\nThe 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.
\nRECORDS OF PERSONAL HEARING – 2ND PROVISO TO SECTION 98(2) OF CGST\/HGST ACT 2017
\n4. 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:
\n(a). That the merger o<\/p>\n
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\n5. 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 Ta<\/p>\n
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\n“1. The transaction of transfer of business as a whole of one of the units of the Applicant in the nature of a going concern amounts to supply of service.
\n2. The transactions of transfer of one of the units 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.”
\n7. 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 prescribe<\/p>\n
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\nFurther, Rule 41 of the CGST\/HGST Rules, 2017, provides as under:
\n“RULE 41. Transfer of credit on sale, merger, amalgamation, lease or transfer of a business:
\n(1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer or 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:
\nProvided 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.
\n(2) The transferor shall also submit a copy of a certificate issued by a practicing chartered accountan<\/p>\n
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\nAs per Schedule II of the CGST\/HGST Act 2017, para 4 pertain to transfer of business assets and clause (c) of para 4, provides as under:
\n(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-
\n(i) The business is transferred as a going concern to another person; or
\n(ii) The business is carried on by a personal representative who is deemed to be a taxable person.”
\nThus, we find force in the contentions raised by the appli<\/p>\n
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