The West Bengal Authority of Advance Ruling has ordered that a liquidator must pay goods and services tax (GST) on sale of assets of a defunct company under liquidation, as the sale is effectively supply of goods.
The AAR has ruled that the National Company Law Tribunal appointed liquidator must have the GST registration till all liabilities cease to exist.
“The sale of the assets of the applicant by NCLT appointed liquidator is a supply of goods by the liquidator, who is required to take registration under section 24 of the GST Act,” the authority said in an order issued in April, remaining valid till June 30.
The section specifies that when goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person.
“If she is already registered as a distinct person of the corporate debtor in terms of Notification No. 11/2020 – Central Tax dated 21/03/2020, she should continue to remain registered till her liability ceases under section 29 (1) (c) of the GST Act,” the authority added.
The company in this case – Mansi Oils and Grains Pvt Ltd – has been closed for 10 years, before the GST regime came into effect, and hence liquidators were automatically migrated to the GST regime. The liquidator was hence not registered.
Experts criticised the ruling on the grounds that every liquidator of an unregistered enterprise would need a GST registration irrespective of the underlying exemption for supplies made by the corporate debtor and his threshold turnover.
“This ruling is nothing more than an absurd technical interpretation of a fiscal law which is still in nascent stages after three years of implementation,” said Rajat Mohan, senior partner at AMRG Associates.
Source : PTI