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

  • Oct 12, 2020 | Divita S Gupta

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.


Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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