9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 1114 - AAR - GSTClassification of supply - Supply or not - supply of goods or supply of services or both - transaction of transfer/ sale of one of the independent running business divisions of the Applicant, as a whole, along with all the assets and liabilities of the independent business division on a going concern basis (business of providing/supplying of engineering services primarily relating to semi-conductor services) - slump sale or not - input tax credit - applicability of GST rate mentioned in Sl. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017. HELD THAT - The activity of the applicant in the instant case is transfer of staffing business, which is one of the form of supply of goods or services or both, agreed to be made by the applicant and thus the first limb is fulfilled. Further the impugned transaction (supply) is admittedly for a consideration, to be received in multiple stages with a performance guarantee and sharing of revenue and thus the second limb also is fulfilled. The applicant intend to sell the staffing business in the course of his business and thus the third limb also is fulfilled. In view of the foregoing the activity of the applicant amounts to or results in supply in terms of Section 7 of the CGST Act 2017. Whether the impugned supply is of goods or services or both? - HELD THAT - Every kind of movable property other than money and securities are goods. In the instant case the staffing business of the applicant is being transferred, which is not a movable property and thus the said supply can't be a supply of goods. Further, anything other than goods, money and securities are services - In the instant case as the impugned supply is not of goods as decided above, it is the supply of service. Further in terms of entry at 4 (c)(i) of Schedule II Activities or transactions to be treated as supply of goods or supply of services of the CGST Act, 2017, transfer of business assets amount to supply of goods unless the business is transferred as a going concern to another person, in which case it amounts to supply of service. Thus the transfer/ sale of the independent running business division of the Applicant as a whole, along with all the assets and liabilities of the independent business division as a going concern basis, in terms of business transfer agreement, amounts to supply of service in terms of Section 7(1)(a). Time of supply of the impugned supply - Section 13 of the CGST Act 2017 - HELD THAT - The time of supply of the impugned transaction has to be determined by the applicant in terms of Section 13 of the CGST Act 2017, as the details required to determine the time of supply are not forthcoming. Value of the impugned supply/transaction - Section 15 of the CGST Act 2017 - HELD THAT - In the instant case, the supplier i.e., Applicant and the recipient of the supply are not related and the price is the sole consideration for the supply and thus the value of the impugned supply shall be the transaction value, which is the price actually paid or payable. The applicant, accordingly, has to arrive at the value of the said supply. Rate of tax applicable to the impugned supply - HELD THAT - SAC 9971 covers Financial services and related services and SAC 99711 covers Financial services (except investment banking, insurance services and pension services) and SAC 997119 Other financial services (except investment banking, insurance services and pension services. Thus the impugned transaction being a financial service it gets covered under SAC 997119. The rate of GST applicable on the impugned transaction is 18%, in terms of Entry No.15(vii) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended. Whether the recipient i.e., the purchaser/transferee of the business as a whole is entitled to claim the credit of the input tax paid on the said transaction? - HELD THAT - Section 95(a) of the CGST Act 2017 stipulates that the questions, on which advance rulings can be sought by the applicant, have to be in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - In the instant case the third question is not related to the supply of the applicant but about the entitlement of the input tax credit by the recipient. Thus the question is beyond the jurisdiction and can't be answered. Applicability of the benefit of SI. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 to the transaction of the applicant - HELD THAT - The said entry prescribes that the services by way of transfer of a going concern, as a whole or an independent part thereof attracts NIL rate of GST unconditionally - in the instant case an independent part (staffing division business) of the applicant's business is being transferred / sold by the applicant. Hence the benefit of Si. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 is applicable to the applicant's transaction, subject to fulfilment of the condition's of a going concern.
Issues Involved:
1. Whether the transaction constitutes "supply" under Section 7 of the CGST/KGST Acts. 2. Classification of the transaction as supply of taxable goods or services, determination of time, value, and rate of tax. 3. Eligibility of the recipient to claim input tax credit on the transaction. 4. Applicability of GST rate as per Notification No.12/2017-Central Tax (Rate). Summary: Issue 1: Whether the transaction constitutes "supply" under Section 7 of the CGST/KGST Acts. The Authority examined whether the transfer of the staffing business division by the Applicant to M/s Tessolve Semiconductor Pvt. Ltd. constitutes a "supply" under Section 7 of the CGST Act. The transaction involved the transfer of an independent running business division along with its assets and liabilities. The Authority concluded that the activity satisfies all three limbs of Section 7 (1)(a) - it is a form of supply, made for a consideration, and in the course of business. Therefore, it constitutes a "supply" under Section 7 of the CGST/KGST Acts. Issue 2: Classification of the transaction as supply of taxable goods or services, determination of time, value, and rate of tax. The Authority determined that the transfer of the staffing business is not a supply of goods as it is not movable property. It qualifies as a supply of services under Section 2(102) of the CGST Act. The time of supply should be determined as per Section 13 of the CGST Act, and the value of supply as per Section 15 (1). The transaction is classified under SAC 997119 (Other financial services) with an applicable GST rate of 18% as per Entry No.15(vii) of Notification No.11/2017-Central Tax (Rate). Issue 3: Eligibility of the recipient to claim input tax credit on the transaction. The Authority stated that the question regarding the recipient's entitlement to input tax credit is beyond its jurisdiction as per Section 95(a) of the CGST Act, which limits the scope of advance rulings to the supply undertaken by the applicant. Issue 4: Applicability of GST rate as per Notification No.12/2017-Central Tax (Rate). The Authority confirmed that the benefit of entry at Si No. 2 of Notification No.12/2017-Central Tax (Rate), which prescribes a NIL rate for the transfer of a going concern, applies to the Applicant's transaction, subject to fulfillment of the conditions of a going concern. Ruling: a. The transaction constitutes a "supply" under Section 7 of the CGST/KGST Acts. b. It is classified as a supply of taxable services with a GST rate of 18%, and the time and value of supply should be determined as per Sections 13 and 15 (1) respectively. c. The question about the recipient's entitlement to input tax credit cannot be answered. d. The benefit of NIL rate as per Notification No.12/2017-Central Tax (Rate) is applicable, subject to conditions of a going concern.
|
