The Authority for Advance Ruling ( AAR ) of West Bengal of members Brajesh Kumar Singh and Jyojit Banik ruled that in the case the transaction of transfer of business by Merger of two registration comes under the ambit of ‘Supply of Services’.
The applicant Jayesh Popat, proprietor of M/s. Vasant Jewellers is registered under the Goods and Services Tax Act having GSTIN 19JQPP3457M1ZA.
The applicant carries another business under the same trade name as a partner and the said partnership firm is also registered under the GST Act having GSTIN 19AAUFV1123F1Z0.
The bench noted that the applicant has submitted that the instant transfer of business pursuance of the MOU can be considered as a supply of services and qualifies for exemption under Sl. No.2 of the Notification No.12/2017-Central Tax (Rate).
Further observed that the applicant proposes to merge with the partnership firm as a going concern with all assets and liabilities to be transferred to the partnership firm and such transfer of business shall take place without any consideration.
The application declared that M/s Vasant Jewellers Partnership firm would take over all the current and future assets, liabilities, rights, claims, employees, enterprises, etc.
Further submitted that after the merger, M/s. Vasant Jewellers (Proprietorship Concern) shall apply for cancellation of registration as prescribed.
The authority observed that the contention of the applicant that on the question whether the transaction would amount as supply of goods or supply of services, has referred to section 2(52) of the GST Act and contends that as business cannot be said to be movable, transfer of business cannot be said to be a transfer of goods.
The applicant further indicated that in his opinion, a merger that results in the transfer of a business would entail the provision of services, and he cited the following provisions of Sections 18(3), 22(3), 85(1), and Rule 41(1) of the GST Rules in support of this claim.
The bench ruled that the transaction of transfer of business of the applicant involved in the instant case shall be treated as a supply of services.
Furthermore, if the requirements to qualify as a going concern are met, the transaction would be covered under Serial No. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06. 2017 [corresponding West Bengal State Notification No. 1136 F.T. dated 28.06. 2017].
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