CA CMA Piyush Taurani
M/s Rajeev Bansal and Sudershan Mittal vs. The Authority of Advance Ruling (AAR)
Fact of the Case
• The applicants, M/s Rajeev Bansal and Sudershan Mittal are engaged in the business of constructing and selling residential and commercial complexes.
• On perusal of the sale deed, the applicant has sold the under-construction building, with its all assets and transfers the rights of the same to the buyer including the approved map from the competent authority.
• The buyer has purchased the under construction building to carry on the same kind of business as the purchaser themselves engaged in constructing residential/commercial complexes and selling.
• The applicant sought for an advance ruling on the issue whether business transfer agreement as a going concern which consists of transferring under construction building project is covered under S. No. 12 of the Notification No. 12/2017 Central Tax (Rate) and is thus exempt from the applicability of Goods and Service Tax (GST) or not ?
Decision of the Case
• The Authority of Advance Ruling (AAR) while relying on the definition of 'business' under Section 2(17) of the Act noted, 'From the definition of the 'business' we find that the acquisition of goods/ services for commencement of business is covered under the said definition.
• A transfer of a business as a going concern is the sale of a business including assets. In terms of financial transaction 'going concern' has the meaning that at the point in time to which the description applies, the business is live or operating and has all parts and features necessary to keep it in operation.
• Thus 'Transfer of a going concern' in a simple way can be described as the transfer of a running business that is capable of being carried on by the purchaser as an independent business.
• The Authority of Advance Ruling (AAR), Uttrakhand ruled that the transfer of under-construction projects under the 'Business Transfer Project' is exempted under Goods Service Tax (GST).
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