Transaction Of Transfer/Sale Of One Of The Independent Running Business Divisions Attracts 18% GST: AAR

The Karnataka Authority for Advance Ruling (AAR) has held that the transfer or sale of one of the independently running business divisions attracts 18% GST.The two-member bench of M.P. Ravi Prasad and Kiran T. Reddy has observed that the transaction of transfer or sale of one of the independent running business divisions as a whole, along with all the assets and liabilities of the independent business division on a going concern basis, constitutes a transaction of "supply" under Section 7 of the CGST Acts.The applicant has entered into a business transfer agreement in writing on stamp paper of requisite value at Bengaluru with M/s Tessolve Semiconductor Private Limited, a private limited company incorporated under the Indian Companies Act, 2013.The applicant submitted that, in terms of the "Business Transfer Agreement or Business Sale Agreement," it has sold the independent running business of "providing/supplying engineering services primarily relating to semi-conductor services", along with all the assets and liabilities as a whole as a going concern.The issue raised was whether the transaction of transfer or sale of one of the independent running business divisions of the applicant, as a whole, along with all the assets and liabilities of the independent business division, constitutes a transaction of "supply" under Section 7 of the CGST and SGST Acts.The AAR held that the supplier, i.e., the 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 supply. Thus, because the transaction is a financial service, it gets covered under SAC 997119. The rate of GST applicable to the impugned transaction is 18%.Applicant’s Name: PICO2FEMTO Semiconductor Services Private LimitedDate: 20-03-2023Click Here To Read The Order

Transaction Of Transfer/Sale Of One Of The Independent Running Business Divisions Attracts 18% GST: AAR

Mariya Paliwala

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