Kvat

  Mr Girish,

  Sale of business as a whole is exempt under rule 3(2)(g) of KVAT Rules 2005. This includes the value of stock,assets and any other items. Here the heir(s) of the deceased person becomes the automatic owner after furnishing the death certificate of the registered person to the registering authority. The input credit that was available to the deceased person/heir also lapses,i.e. it can not be claimed by the new partnership firm.

MJK 

Hello,

Section 46(2-A) of KVAT Act read-with Rule 166 of KVAT Rules do provide for availing of unadjusted credit to the new entity... 

Regards

Dharma

   Mr Dharmaraju,

 I meant that any input tax credit that has not been claimed by the seller of business will lapse. Sec46(2-A) refers to the input tax credit which has already been claimed by the seller of the buness and declared as excess and carried forward....MJK

So, the dealer can ensure that input tax has been claimed in the returns filed till sale of business...

  Mr Dharamaraju,

 Yes that is the point,the seller has to take care....MJK

Thank you sir...

I believe, while selling a business (which includes stock) the dealer would have considered these things and would have taken care..

Thank you for your valuable opinions sir... 

It is cleared that in case of change in the status of business, the stocks & other assets are not charged for VAT.

If the dealer(deceased) cannot claim refund of input credit as on the date of selling his business, then the new taking over Firm can claim the same by showing opening input tax credit? I am not able to understand this topic from your above opinions.

Can you give further clarification?

Thanks......

HI Girish,

When the business is sold as a whole, the assets, liabilities will also be transferred. The asset amogst others would also include stock and relatable input tax credit. The buying unit will have to show the value of stock & relatable stock as purchases in the returns and avail the credit in regular manner.

  Mr Girish,

   The selling dealer can not issue invoices for sale of his business to another(firm or proprietor). Sale of business is done through an agreement. No VAT will be charged on this sale and no input tax credit will be available to the buyer . But,generally, the seller will avail as much input as possible in his returns, because he will file returns till the last day of business before sale.In normal circumstances he will be left with some excess input tax credit which can be carried forward. Such excess input tax,if any ,shown in the returns,can be claimed by purchasing dealer under rule 166(?).....MJK.