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GST applicable on Transfer of a Running Business along with Capital Assets
July, 16th 2020

The Andhra Pradesh Authority of Advance Ruling (AAR) ruled that the business of the applicant, Shilpa Medicare Limited of Andhra Pradesh unit, as a whole along with the capital assets are being transferred as going concerned to Shilpa Medicare Limited of Karnataka Unit for a monetary consideration amounts to the supply of service on which the Goods and Services Tax (GST) is applicable.

The applicant, M/s Shilpa Medicare Limited undertakes Research and Development work in Active Pharmaceutical Ingredient (API) & formulation molecules and manufacture of formulation products in small quantities for R&D purpose.

The business of the applicant, Shilpa Medicare Limited of Andhra Pradesh unit, as a whole along with the capital assets are being transferred as going concerned to Shilpa Medicare Limited of Karnataka Unit for a monetary consideration.

The applicant had submitted no documentary evidence providing that the transaction is a going concern except for his categorical declaration in the application as such.

The applicant has sought advance ruling on the issue of whether the transaction would amount to supply of goods or supply of services or supply of goods & services.

The Authority consisting of members D. Ramesh and M. Shreekanth ruled that the transaction of transferring business along with the capital assets amounts to the supply of service.

The other issue raised was Whether the transaction would be covered under Sl.No.2 of the Notification No.12/2017 – Central Tax (Rate) dated June 28, 2017.

 

The Authority ruled that the transaction will be covered under Sl.No.2 of the Notification No.12/2017 – Central Tax (Rate) dated June 28, 2017.

Lastly, can an applicant file GST ITC-02 return and transfer unutilized ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit.

The Authority ruled that an applicant can file GST ITC-02 return and transfer unutilized ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit.


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