Scope of supply— Section 7 of CGST Act— The Applicant has entered into business transfer agreement in writing on a stamp paper of requisite value at Bengaluru, with M/s Tessolve Semiconductor Private Limited.

The Applicant submits that in terms of the aforesaid “Business Transfer Agreement / Business Sale agreement” it has sold the independent running business of “providing/supplying engineering services primarily relating to semi-conductor services”, along with all the assets and liabilities as a whole as a going concern, on as is where is basis.

The applicant has sought advance ruling in respect of the following questions:

a. Whether the transaction of transfer/ sale of one of the independent running business divisions of the Applicant, namely, “business of providing/supplying of engineering services primarily relating to semi-conductor services” as a whole, along with all the assets and liabilities of the independent business division on a going concern basis, in terms of business transfer agreement dated 27.06.2022, entered into by the Applicant with M/s Tessolve Semiconductor Private Limited, located at No. 31/2, Phase-II, Electronic City, Bengaluru-560100, constitutes a transaction of “supply” under Section 7 of the CGST/SGST Acts?

b. If, the answer to the above question/point is in affirmative, whether the transaction constitutes supply of taxable goods or taxable services or both? And would be the time of supply, value of supply and rate of tax applicable to such supply?

c. If, the answer to the First and Second questions are in affirmative, whether co the recipient i.e., the purchaser/transferee of the business as a whole is fog entitle to claim the credit of the “input tax” paid on the said transaction?

d. Whether the GST rate mentioned in Si No 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 is applicable to the applicant?

Held that— 

a. The transaction of transfer/sale of one of the independent running business divisions of the Applicant, namely, “business of providing/supplying of engineering services primarily relating to semi-conductor services” as a whole, along with all the assets and liabilities of the independent business division on a going concern basis, in terms of business transfer agreement dated 27.06.2022, entered into by the Applicant with M/s Tessolve Semiconductor Private Limited, located at No. 31/2, Phase-II, Electronic City, Bengaluru-560100, constitutes a transaction of “supply” under Section 7 of the CGST/KGST Acts.

b. The transaction constitutes supply of taxable services, the time of supply has to be determined in terms of Section 13 of the CGST Act 2017, the value of supply need to be determined in terms of Section 15 (1) of the CGST Act 2017 and the rate of GST applicable on the 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.

c. The question is about the entitlement of the input tax credit by the recipient of the service being provided by the applicant and hence can't be answered in terms of Section 95(a) of the CGST Act 2017.

d. The benefit of entry at Si number 2 of the Notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 is applicable to the applicant subject to fulfilment of the condition/s of a going concern.