9911796707
TMI Blogtreatment of liability in case of transfer of businessX X X X Extracts X X X X X X X X Extracts X X X X ..... A taxpayer has filed an appeal against the demand order which is pending for hearing. He has sufficient balance in the credit ledger to meet any tax demand that may arise in appellate proceedings. However, due to some reasons, he has to transfer his business to another person as going concern and wants to file ITC-02 for transfer of ITC. My query is if the liability arises in future, which GSTN wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll furnish the same? can the ITC of transferee GSTN be utilized for discharging the tax liability? - Reply By Ganeshan Kalyani - The Reply = In my view, the transferee GSTIN will be discharging the tax liability. - Reply By Shilpi Jain - The Reply = There is one provision in GST law which takes about liability in case of transfer of business. In this provision both the translator and the transfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would be jointly and severally liable. When the business transfer agreement is made a specific clause can be included to mention that this liability also has to be borne by the transferee - Reply By Shilpi Jain - The Reply = Read translator as transferor in the above post - Reply By Rajat Gupta - The Reply = Hi, thanks for the reply. My concern is if the transferor GSTN is held liable, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax will have to be discharged using cash. But of transferee can pay, it can use the credit ledger balance for tax payment. this will also spare interest liability (subject to available balance). - Reply By KASTURI SETHI - The Reply = If any liability arises for the period prior to the date of transfer of business as going concern, transferor is responsible for discharging tax liability. The trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feror cannot use unutilized ITC which stands transferred to the transferee. In other words, the transferor will have to discharge tax liability in cash. - Reply By KASTURI SETHI - The Reply = An agreement cannot be executed in violation of GST Acts. - Reply By Shilpi Jain - The Reply = Sale of business is a business transaction Also what I understand is that the liability is not certain on date. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will depend on the outcome of the appeal. In such a scenario is the transferor is no longer going to exist then the transferee can be given the responsibility to pay. Hence the business transfer agreement can mention that any future tax liability will have to be borne by the transferee. - Reply By KASTURI SETHI - The Reply = Dear Querist, There is no restriction to incorporate such clause in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement as per Contract Act but it will not be litigation-free. It will not be digested by the department. The liability arising for the period prior to the date of transfer of business is yours. In case you want to add such clause in the agreement, you must take shelter of any case law which has been accepted by the department otherwise you will invite SCN. All facts should be brought to the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice of the department. - treatment of liability in case of transfer of business - Query Started By: - Rajat Gupta Dated:- 31-5-2024 Last Replied Date:- 3-6-2024 Goods and Services Tax - GST - Got 8 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
