TMI Blog2021 (4) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 and the applicability of the GST on the 'Goodwill'. The application filed by the applicant seeking advance ruling is disposed as withdrawn. - TN/06/ARA/2021 - - - Dated:- 16-3-2021 - SHRI B. SENTHILVELAVAN, I.R.S AND THIRU KURINJI SELVAAN V.S., M.SC., (AGRI.), M.B.A., MEMBER, Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to he appealed against is communicated. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. SHIV SAMARA HEALTH CARE ENTERPRISES, Raguvel Towers, First Floor, No.18, Nedunchezhian Street, Manali, Chennai-600068 (hereinafter called the 'Applicant& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be towards share of profit standing to their credit in the books of accounts as on the date of retirement and the balance amount of ₹ 1,15,04,000/- will be towards good will. The share of profit ₹ 1,64,96,000/-and Goodwill ₹ 1,15,04,000 /-will be non-taxable in the hands of retiring partners. The appropriate tax if any shall be paid by the partnership firm/continuing partners and also both the amount mentioned above were paid to the retiring partners by way of Cheque/RTGS on 25/04/2019. 2.2. The applicant is of the view that the amount paid to retiring partners as good will amounting to ₹ 1,15,04,000/- cannot be considered as a supply under Section 7 of the CGST Act, since this transaction cannot be treated as in the course of or for the furtherance of business . Further, they have stated that Goodwill is not mentioned in any of the Schedules prescribed under the GST Act. Hence, the applicant is of opinion that this Supply is not liable to tax under the GST Act. They have also stated that the goodwill generated is an intangible asset, eligible for depreciation under section 32 of the Income Tax Act. However, it cannot be described as an 'asset&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at. They stated that they will submit in writing the details in 2 weeks' time. 3.3 The applicant vide their letter dated 29.01.2020 submitted the following documents: Deed of partnership dated 15.10.2008 between i. Mr. R. Selvaraj, Mr. R.Sankar, iii. Mr. R. Sivaprakasam with profit sharing ratio 1/31d each. Modified Partnership deed dated 21.03.2010 admitting the following two partners: i. Mrs. D.Karpukarasi, ii. Mrs.V.Rani with profit sharing ratio of 20% each among all five partners Deed of retirement dated 30.03.2019 for the following retiring partners- i. Mrs. D.Karpukarasi, ii. Mrs.V.Rani Amendment to partnership deed dated 01/04/2019 between the existing partners: i. Mr. R. Selvaraj, ii. Mr. R.Sankar, iii. Mr. R. Sivaprakasam with profit sharing ratio 1/3rd each. Proof of payment made to retiring partners towards their share of profit carried over and goodwill i. Indian Bank Account Statement from 03.04.2019 to 30.04.2019 ii. Indian Bank Account Statement dated 07.05.201,9 iii. RTGS payment made on 07.05.2019 Documents for changes made in GST Registration Certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the use money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; As per Section 7(a) of the CGST Act, 2017, the expression 'supply' includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business and excludes activities or transactions specified in Schedule III of CGST Act. Hence the goodwill amount is a taxable supply (service) under CGST Act. As per Rule 31 read with 51 (lc) of the Rules, anything not mentioned in the harmonized system nomenclature will face 18%. These are called residual entries in technical sense and the same principle is already in place for GST on services. Since intangibles such as trademarks and goodwill do not find a mention in the schedule they would fall in the category of residual entry and goodwill will be covered under the Service Accounting Code 999799. In view of the above, the supplier of service would be the retiring partners and applicant wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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