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Slump sale is not defined under GST law. It simply means ‘transfer of a business as a going concern’ to cover all the transactions of business transfer.
Slump sale is one of the methods of business restructuring. Under this method, certain assets and liabilities are sold together for a lump sum sale consideration without determining the individual values of assets and liabilities sold.
Under GST, supply includes the supply of all types of goods and services such as sale, transfer, lease, rental, license, barter or disposal made for a consideration by one person to another in course of furtherance of business. It is an inclusive definition. Thus, the scope goes beyond the course of furtherance of business. So, from the above definition, we can say that slump sale is considered as supply under GST.
Schedule II of the CGST Act: It talks about activities that are treated as a supply of goods or services. Here clause 4 says that transfer of business assets is considered as supply of goods.
However, as per clause 4(c) transfer of a business as a whole and as a going concern is not considered as a supply of goods.
Notification No.12/2017- Central Tax (Rate): As per this notification, services by way of transfer of going concern as a whole or part thereof is exempt from GST.
By way of this notification, the Revenue has clarified that transfer of a business as a going concern is exempt from GST. But, the term going concern is not defined anywhere under GST.
The notification says that the activity of business transfer as a going concern is considered as supply of service and the same is exempt from GST. Similarly, Schedule II of the CSGT Act excludes the transfer of a business as a going concern as the supply of goods but includes the transfer of business assets as the supply of goods.
From above, we can interpret that
Karnataka Authority for Advance Ruling in case of M/s Rajshri Foods Private Limited
Facts: The applicant had three manufacturing units and intended to sell one of them along with fixed assets like land, building, plant and machinery, current assets and liabilities for a lump sum consideration. Below questions were raised: