TMI Blog2023 (3) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... le stages with a performance guarantee and sharing of revenue and thus the second limb also is fulfilled. The applicant intend to sell the staffing business in the course of his business and thus the third limb also is fulfilled. In view of the foregoing the activity of the applicant amounts to or results in supply in terms of Section 7 of the CGST Act 2017. Whether the impugned supply is of goods or services or both? - HELD THAT:- Every kind of movable property other than money and securities are goods. In the instant case the staffing business of the applicant is being transferred, which is not a movable property and thus the said supply can't be a supply of goods. Further, anything other than goods, money and securities are services - In the instant case as the impugned supply is not of goods as decided above, it is the supply of service. Further in terms of entry at 4 (c)(i) of Schedule II [Activities or transactions to be treated as supply of goods or supply of services] of the CGST Act, 2017, transfer of business assets amount to supply of goods unless the business is transferred as a going concern to another person, in which case it amounts to supply of service. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28th June, 2017 to the transaction of the applicant - HELD THAT:- The said entry prescribes that the services by way of transfer of a going concern, as a whole or an independent part thereof attracts NIL rate of GST unconditionally - in the instant case an independent part (staffing division business) of the applicant's business is being transferred / sold by the applicant. Hence the benefit of Si. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 is applicable to the applicant's transaction, subject to fulfilment of the condition's of a going concern. - DR. M.P. RAVI PRASAD AND SRI. KHAN REDDY T, MEMBER Represented by Sri. Chetan Kumar, C A Authorised Representative ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98(4) OF THE KGST ACT, 2017 M/s. Pico2femto Semiconductor Services Pvt. Ltd., (herein after referred to as 'Applicant ), # 555/649, 1-Sector, HSR Layout, Bengaluru - 560 102., having GSTIN 29AAJCP9958L1ZA, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitutes supply of taxable goods or taxable services or both? And would be the time of supply, value of supply and rate of tax applicable to such supply? c. If, the answer to the First and Second questions are in affirmative, whether co the recipient i.e., the purchaser/transferee of the business as a whole is fog entitle to claim the credit of the input tax paid on the said transaction? d. Whether the GST rate mentioned in Si No 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 is applicable to the applicant? 3.1 Admissibility of the application : The applicant claimed that the questions on which advance rulings have been sought are with regard to Applicability of a notification issued under the provisions of the CGST Act 2017 ; Determination of time and value of supply of goods or services or both ; Determination of the liability to pay tax on any goods or services or both and Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or service or both, within the meaning of that term , which are covered under Sections 97(2) (b),(c),(e) and (g) res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is inclusive and exhaustive and therefore, it covers within its ambit slump sale of business, yet by virtue of Section 7(1A) read with Sl.No.4(c)(i) of the SCHEDULE-II of the CGST Act, read with Sl. No. 2 of Notification NO. 12/2017-Central Tax (Rate) dated 28.6.2027, issued by the Central Government implies that the transaction of transfer of business as a going concern on slump sale basis does not constitute supply of goods. Further, relying on the Notification NO. 12/2017-Central Tax (Rate) dated 28.6.2027, the transaction constitutes supply of services at NIL rate of tax. 5.3 On parity of facts and law, it is also the understanding and bona fide belief that the decision of this Hon'ble Advance Ruling Authority, in the case of M/s Rajashree Foods (P) Ltd., Bengaluru-560020, delivered in terms of order No. KAR.ADRG.06/2018 dated 23.4.2018, is squarely, applicable to this present matter of the Applicant. PERSONAL HEARING PROCEEDINGS HELD ON xx.xx.2022 6. Sri. Chetan Kumar, Chartered Accountant Authorised Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application. FINDINGS % DISCUSSI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill happen from Tessolve. c) The existing employees of the company under the stalling business will be absorbed in the payroll of Tessolve. d) The assets and liabilities of the staffing business are absorbed in the books of Tessolve. e) The consideration for the transfer is received in multiple states with a performance guarantee and sharing of revenue. The minimum consideration Rs. 4.5Cr. and on meeting the performance criteria, the total consideration is Rs. 27.5Cr including revenue sharing. 11. In view of the above, the applicant sought advance rulings in respect of the questions mentioned at para 3 supra. We proceed to consider and examine the questions one at a time. The first question is whether the activity of the applicant i.e. the sale of staffing business amounts to or results in supply in terms of Section 7 of the CGST Act 2017 and if so whether it is of goods or services. We proceed to examine, discuss and decide the issue. In this regard we invite reference to section 7 (1) (a) which is as under: 7. Scope of supply. (1) For the purposes of this Act, the expression supply includes (a) all forms of supply of goods or services or bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arranging transactions in securities;] It could be seen from the above that every kind of movable property other than money and securities are goods. In the instant case the staffing business of the applicant is being transferred, which is not a movable property and thus the said supply can't be a supply of goods. Further, anything other than goods, money and securities are services. In the instant case as the impugned supply is not of goods as decided above, it is the supply of service. Further in terms of entry at 4 (c)(i) of Schedule II [Activities or transactions to be treated as supply of goods or supply of services] of the CGST Act, 2017, transfer of business assets amount to supply of goods unless the business is transferred as a going concern to another person, in which case it amounts to supply of service. Thus the transfer/ sale of the independent running business division of the Applicant as a whole, along with all the assets and liabilities of the independent business division as a going concern basis, in terms of business transfer agreement, amounts to supply of service in terms of Section 7(1)(a). 14. Now we proceed to consider the time of supply of the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction has to be determined by the applicant in terms of Section 13 of the CGST Act 2017, as the details required to determine the time of supply are not forthcoming. 15. Now we proceed to consider the value of the impugned supply/transaction. In this regard we invite reference to Section 15 of the CGST Act 2017, which deals with the value of taxable supply and the relevant part of said section is as under: Section 15. Value of Taxable Supply (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. In the instant case, the supplier i.e., Applicant and the recipient of the supply are not related and the price is the sole consideration for the supply and thus the value of the impugned supply shall be the transaction value, which is the price actually paid or payable. The applicant, accordingly, has to arrive at the value of the said supply. 16. Now we proceed to consider the rate of tax applicable to the impugned supply, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the agreement is about the consideration of the transaction and clause 3.1 specifies that the total consideration, inclusive of all taxes and revenue sharing amount, is Rs. 27.5 Crores, payable in 3 years. However, the applicant has not furnished any certificate from the qualified auditor to the extent that the staffing division business is a going concern. Thus in the instant case an independent part (staffing division business) of the applicant's business is being transferred / sold by the applicant. Hence the benefit of Si. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 is applicable to the applicant's transaction, subject to fulfilment of the condition's of a going concern. 19. In view of the foregoing, we pass the following RULING a. The transaction of transfer/sale of one of the independent running business divisions of the Applicant, namely, business of providing/supplying of engineering services primarily relating to semi-conductor services as a whole, along with all the assets and liabilities of the independent business division on a going concern basis, in terms of business transfer agreement dated 27.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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