Question92:
One of our client having GST as a Proprietary Concern and wef 01/04/2018 they have created a Private Limited company in which he is also a Director .

He has Stock in Trade of Rs.60 Lacs and ITC is Nil as the same is already utilized all accumulated ITC.
They have completely transfer all assets and liabilities to Private Limited Company including Stock in Trade as mentioned above .
Related section and rules ( Sub Section (3) of Section 18 of CGST Act,2017.
Rule 41 of CGST Rules 2017
Our query in this regards is as :
1. The same stock need to be sold in the name of company and Pay GST in proprietary unit and take ITC in Company treated as supply as under Schedule As per schedule II
4. Transfer of business assets [a] where 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;
or
2 The same stock may transfer without payment of GST and subsequently the same goods to be sold from company and make payment of GST accordingly.
3 We need to file ITC02 ( Hence NIL balance in ITC ledger )



Answer
 The transfer of business as a going concern is not transfer under GST. This fact have been concluded from the S. no. 4 part (c) of Schedule II. The same is reproduced below:

4. Transfer of business assets

c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless'

(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be a taxable person.

On the other hand "Service by way of transfer of going concern, as a whole or independent part thereof " is exempt under GST vide Notification No. 12/2017- Central Tax (Rate).

Further, Rule 41"Transfer of credit on sale, merger, amalgamation, lease or transfer of a business" is directly applicable to your case on the basis of transfer on going concern . which is reproduced as follows:-

CGST RULE 41
(1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer or change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee:
Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.
(2) The transferor shall also submit a copy of a certificate issued by a practicing chartered accountant or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities.
Thus according to this Rule transferor required to file in FORM GST ITC-02 details of transfer along with CA certificate details even where unutilised ITC in E-credit ledger is NIL. (Reply dt. 17/4/2018)