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2018 (12) TMI 767 - AAR - GSTSupply 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. 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 transfer these businesses to MSPL and MPMPL and this direction is as per the first agreement between the seller and the applicant - apparently the applicant has directed the seller for transference of these business to MSPL and MPMPL. 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 and he and his directors have an active role in all aspects of the agreement, starting from terms relating to parties to agreement, transfer of the BP and PM business, Price and Termination which is very clear from these details of agreement - this role of the applicant is clearly a service covered in para 5 (e) of Schedule-II of Section 7 of the CGST Act, wherein the applicant is doing the act of giving 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. 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. 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. Ruling:- The 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/MPMPL’. The value is to be determined as per Rule 28 of the CGST Rules, 2017.
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