Whether transfer of business assets from one division to another division is taxable under GST?
To decide the taxability, we need to read schedule-I, definition of goods and schedule-II of the GST ACT which are as follows:-
Permanent transfer/disposal of business assets where input tax credit has been availed on such assets.
- Supply of goods or services between related persons, or between distinct persons as specified in section 10, when made in the course or furtherance of business.
Goods is defined as
“goods’’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
- 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.
(b) Where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services.
Conclusion: Schedule II says that supply of business assets under the direction of person carrying the business, shall be treated as supply of goods by the person. Now this schedule read with Schedule-I (2), makes such type of transfer as taxable supply when made in the course or furtherance of business. Whether there is consideration or not, it will not alter the conclusion.
The answer of question will be different (i.e. It will not be taxable) if transfer between two branched where there is no separate registration.