Since liabilities are not transferred, the transaction of 'transfer of business' in the instant case cannot be treated as transfer as going concern.
Levy of GST— In the present instance, the underlying issue requires evaluation of the factum of transfer of business as a going concern to consider the same exempt from tax.
In the present instance, the applicant is transferring all its fixed assets, inventories, customer base, existing LCOs and also supporting in transferring all LCOs through an agreement to ACN. All the rights received from broad casters to the applicant is also being transitioned to ACN which would enable ACN to run the business of provision and distribution of signals through various LCOs without any interruption.
The applicant submits that it retains the existing liabilities and liabilities arising in future due to past relationships and employees due to presence of similar expertise and manpower with the purchaser having been in a similar business.
At this juncture, a question arises as to whether non-transfer of liabilities and employees itself will impact the position of business being transferred as a going concern or whether any transfer of business in a running condition without interruption will qualify as a going concern.
Held that—
the transaction of 'transfer of business' in the instant case does not fit in the definition of a 'going concern' in the context of exclusion of liabilities.
Hence, the entry at serial No.2 of the chapter 99 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 prescribing the rate of tax for 'the services by way of transfer of a going concern as a whole or an independent part there of', as “NIL” rated, is not applicable to the present case.
Since liabilities are not transferred, the transaction of 'transfer of business' in the instant case cannot be treated as transfer as going concern.
Levy of GST— In the present instance, the underlying issue requires evaluation of the factum of transfer of business as a going concern to consider the same exempt from tax.
In the present instance, the applicant is transferring all its fixed assets, inventories, customer base, existing LCOs and also supporting in transferring all LCOs through an agreement to ACN. All the rights received from broad casters to the applicant is also being transitioned to ACN which would enable ACN to run the business of provision and distribution of signals through various LCOs without any interruption.
The applicant submits that it retains the existing liabilities and liabilities arising in future due to past relationships and employees due to presence of similar expertise and manpower with the purchaser having been in a similar business.
At this juncture, a question arises as to whether non-transfer of liabilities and employees itself will impact the position of business being transferred as a going concern or whether any transfer of business in a running condition without interruption will qualify as a going concern.
Held that—
the transaction of 'transfer of business' in the instant case does not fit in the definition of a 'going concern' in the context of exclusion of liabilities.
Hence, the entry at serial No.2 of the chapter 99 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 prescribing the rate of tax for 'the services by way of transfer of a going concern as a whole or an independent part there of', as “NIL” rated, is not applicable to the present case.