AAR Holds Enterprise Takeover as “Going Concern Switch”; Pure Service Work Orders Proceed to Take pleasure in GST Exemption
Horizen Edge Applied sciences Pvt. Ltd., a newly included firm, approached the Authority for Advance Ruling after taking on the enterprise of M/s Horizen, a sole proprietorship engaged in digitalisation and monitoring of public water-supply schemes for the Public Well being Engineering Directorate (PHED), Authorities of West Bengal. As a part of the takeover, all operational property have been transferred, excluding solely the non-public properties. The corporate proposed to proceed the identical PHED-related work with out interruption, masking GIS-based mapping, Jalmitra software enhancement, information administration, and different technical providers beneath the Jal Jeevan Mission.
The applicant argued that the transaction amounted to a switch of enterprise as an “ongoing concern,” exempt from GST beneath Sl. No. 2 of Notification 12/2017. It additionally sought readability on the GST remedy of ongoing and future PHED work orders, contending that an identical providers ought to proceed to get pleasure from exemption as “pure providers,” regardless of the change in authorized type.
Major Challenge: Whether or not the takeover qualifies as an exempt switch of a going concern, and whether or not PHED-related digital and technical providers carried out thereafter stay exempt as “pure providers” beneath Articles 243G and 243W.
Authority Dominated: The Authority held that M/s Horizen was an lively and viable enterprise on the time of switch, with ongoing tasks, property, and no indication of winding up. As all enterprise property and liabilities have been transferred and the operations have been to proceed seamlessly, the transaction happy the check of a “going concern” and was exempt from GST beneath Sl. No. 2 of Notification 12/2017.
The Authority clarified that earlier advance rulings obtained by M/s Horizen couldn’t mechanically apply to the transferee, as Part 103 limits their binding impact to the unique applicant. Nevertheless, on inspecting the contemporary pattern work orders, it discovered that the actions together with digital mapping, GIS integration, software assist, information validation, and JJM-related documentation, have been purely service-based and rendered to a State Authorities division in reference to drinking-water features. These providers subsequently certified for exemption as “pure providers” beneath Sl. No. 3 of Notification 12/2017, as long as their nature remained unchanged.
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