GST applicable on Transfer of a Running Business along with Capital Assets

The Andhra Pradesh bench of the Authority for Advance Ruling has held that GST will be applicable while transferring an operational business along with capital assets. The applicant, a business involved in the research and development of active pharmaceutical ingredients, approached the Andhra Pradesh bench of the AAR seeking an advance ruling on three concerns - 

  • Whether GST would be applicable when their business and capital assets were transferred as going concern to another entity.
  • Whether the transaction would be covered under Sl.No.2 of the Notification No.12/2017 – Central Tax (Rate) dated June 28, 2017.
  • Whether the applicant can file GST ITC-02 return and transfer unutilised ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit.

The AAR ruled that the transaction of transferring business along with the capital assets amounts to the supply of service and that the transaction will indeed be covered under Sl.No.2 of the Notification No.12/2017 – Central Tax (Rate) dated June 28, 2017. Finally, it held that the applicant can file GST ITC-02 return and transfer unutilised ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit.

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