Sale of Assets of Liquidating Company done by Liquidator is Supply of Goods/Services under S.7 CGST Act: AAR [Read Order]
The Liquidator undertakes the Insolvency Resolution Process in light of lack of any promoters or directors of the company being present or reachable
![Sale of Assets of Liquidating Company done by Liquidator is Supply of Goods/Services under S.7 CGST Act: AAR [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/AAR-CGST-CGST-Act-Goods-Services-taxscan.jpg "Sale of Assets of Liquidating Company done by Liquidator is Supply of Goods/Services under S.7 CGST Act: AAR [Read Order]")
In a recent ruling, the West Bengal Authority for Advance Ruling (AAR) has held that any sale of assets of a company in liquidation conducted by its liquidator qualifies as a supply of goods or services under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017. The AAR ruling came against an application filed by Maheshwary Ispat Limited, a company undergoing liquidation,...
In a recent ruling, the West Bengal Authority for Advance Ruling (AAR) has held that any sale of assets of a company in liquidation conducted by its liquidator qualifies as a supply of goods or services under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017.
The AAR ruling came against an application filed by Maheshwary Ispat Limited, a company undergoing liquidation, seeking clarity on the applicability of GST to the sale of its assets by the liquidator, Santanu Brahma who was appointed so by the National Company Law Tribunal (NCLT) on December 19, 2023.
Read More: AAR and AAAR Weekly Round Up
Following transfer of the assets of the company, the Liquidator had published E-auction sale notice for "Unexpired Lease of the Office Premises of the CD situated at City Centre 1, Kolkata 700064" in "The Telegraph Calcutta edition in English, 'Business Standard Kolkata edition in English and 'Aajkaal Kolkata in Bengali which was successfully bid by M/s. Star Turn Exim Pvt. Ltd.
Reverse Charge Mechanism under GST, Click here
Liquidator Santanu Brahma queried before the AAR whether the sale of assets in liquidation would qualify as a "supply" under GST law. The applicant argued that the company was unregistered under the GST regime at the time of liquidation and that there was no specific GST registration process or legislative provisions to carry out GST registration for companies in liquidation.
Reverse Charge Mechanism under GST, Click here
The liquidator also cited challenges in obtaining registration due to system limitations that prevented registration under a single liquidator’s name without additional promoters.
Read More: No GST on Reimbursement of Electricity Charges when Collected at Actual Cost Basis: AAR
The two-member bench comprising Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST observed that Notification Nos. 11/2020-Central Tax dated 21.03.2020 & 39/2020-Central Tax dated 05.05.2020 provided a special procedure for corporate debtors undergoing corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.
The Bench referred to the precedent by the same AAR in the case of Mansi Oils and Grains Pvt. Ltd. (2020) where it was held that the sale of the assets of the applicant by NCLT appointed liquidator is a supply of goods by the liquidator.
Consequently, the AAR held that the sale of assets by a liquidator is a taxable event under Section 7 of the CGST Act, as it falls within the definition of "supply of goods or services or both." The authority further ruled that the liquidator must comply with GST requirements, including obtaining registration and charging applicable GST on asset sales.
To Read the full text of the Order CLICK HERE
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