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2023 (1) TMI 78 - AAR - GSTClassification of supply - supply of goods or supply of services - transfer of business by way of merger of two registration/distinct person - going concern or not - applicability of Entry No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - levy of GST - transfer of existing stock (closing stock) assets, others etc. from proprietorship concern to the Partnership concern. HELD THAT:- Here the applicant intends to transfer his entire proprietorship business where the transferee agrees to take over the assets as well as the liabilities of the said transferor concern along with the employees and their benefits. In our view, such transfer of business cannot be treated as supply of goods since business cannot be said to be a movable property so as to qualify as ‘goods’ as defined in clause (52) of section 2 of the GST Act. Further, anything other than goods, money and securities falls within the meaning of ‘services’ as defined in clause (102) of section 2 of the GST Act. The term 'going concern' is not defined under the GST Act or rules framed there under. The concept of going concern has been defined in Accounting Standards – 1 issued by ICAI which states that a fundamental accounting assumption is that of ‘Going Concern’ according to which “the enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations”. It therefore appears that to qualify as a ‘going concern’, the business must not have ‘intention or necessity of liquidation or of curtailing materially the scale of the operations’. In this context, we like to mention that the applicant has furnished before us copy of ‘Audit report under section 44AB of the Income-tax Act, 1961’ related to the period from 01.04.2020 to 31.03.2021. However, we do not find any comments from the auditor in respect of the ‘entity's ability to continue in operation for the foreseeable future’. We are, therefore, unable to conclude that the applicant has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations. The transaction of transfer of business of the applicant involved in the instant case shall be treated as a supply of services - The transaction would be covered under Serial No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 [corresponding West Bengal State Notification No. 1136 F.T. dated 28.06.2017] subject to fulfilment of the conditions to qualify as a going concern.
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