GST on Sale, Transfer, Amalgamation of Business

Under the GST framework, transferring a business as a "going concern" is exempt from tax, ensuring neutrality for genuine reorganizations, whereas itemized asset transfers attract GST. During mergers or demergers, merging entities remain distinct taxable persons until the NCLT order date.

Under Section 18(3) and Rule 41, the transferor can pass unutilized Input Tax Credit (ITC) to the transferee via FORM GST ITC-02, provided liabilities are also transferred. While controversies exist regarding transitional ITC mismatches and unadjusted advances, courts have affirmed the transferee's right to unutilized ITC and ruled that tax proceedings against non-existent amalgamated entities are void ab initio.

The GST implication on the sale or transfer of a business depends fundamentally on the manner in which such transfer is structured. Under the GST framework, a business may be transferred either as a going concern or through an itemized transfer of individual assets and liabilities, with materially different tax consequences in each case. While the transfer of a business as a going concern is recognized as a distinct category of supply and is eligible for exemption subject to prescribed conditions, an asset-wise transfer attracts GST depending upon the nature of the goods or services involved.