2026-VIL-202-AAR
  1. Home
  2. 2026-VIL-202-AAR

SGST Advance Ruling Authority

GST – Karnataka AAR - Transfer of Business as Supply - Section 7(1)(a) of CGST Act, 2017 - Applicant, a Limited Liability Partnership, entered into Commercial Terms for Agreement to Sale for transfer of its restaurant business to the Buyer for a lump-sum consideration - Whether the transfer of business constitutes a supply within the meaning of Section 7 of the CGST Act, 2017 - HELD - Section 7(1)(a) requires that there is a supply of goods or services or both, made or agreed to be made for a consideration, by a person, in the course or furtherance of business. The Applicant, being a Limited Liability Partnership, falls within the definition of person under Section 2(84) of the CGST Act, 2017. The Buyer is required to pay a consideration as per the agreement, as defined under Section 2(31), and the transaction is therefore not gratuitous in nature. The Applicant carries on business within the meaning of the inclusive definition in Section 2(17), and the transaction arises in the course or furtherance of such business. All the essential ingredients of Section 7(1)(a) are satisfied - The transaction constitutes a supply within the meaning of Section 7(1)(a) of the CGST Act, 2017 – Ordered accordingly - Exemption for Transfer of Going Concern under Entry No. 2 of Notification No. 12/2017-Central Tax (Rate) - Under the agreement, the Buyer was to take over the restaurant operations along with the staff, faculty accommodation and recurring operational costs and the assets. A Handover Letter and Asset Transfer Acknowledgement Letter recorded the actual handover of operations and of the assets in working condition. Past liabilities of the business were not transferred, and a single lump-sum consideration was agreed without item-wise valuation of assets - Whether the transfer of business is a transfer of a going concern, as a whole or an independent part thereof, exempt under Entry No. 2 of Notification No. 12/2017-Central Tax (Rate) - HELD - The expression going concern is not defined under the CGST Act, 2017. Its determination requires examining the substance and overall effect of the transaction, namely whether the business activity is transferred as an operational and functional unit which the transferee can continue after the transfer. The handover of operations, staff, assets and responsibility for maintenance, repairs, operational expenses and insurance shows that what is transferred is not merely a collection of assets but the restaurant business as an identifiable and functioning economic activity. The absence of item-wise valuation, by itself, is not conclusive, but it supports the intention to transfer the undertaking as an operational whole. Transfer of all past liabilities is not an indispensable condition, and retention of certain past liabilities by the transferor cannot alter the character of the transfer of a functioning business undertaking - The transfer is covered under Entry No. 2 of Notification No. 12/2017-CT (Rate) and is exempt from GST – Ordered accordingly
Download File
show more Judgements  

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

GST Adjudication & Appeals Reform
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?