No GST On Slump Sale Transactions In India

In an important ruling in the Piramal Enterprises Limited's case under the erstwhile VAT statute, the Bombay High Court (BHC) has reiterated that a business transfer as a going concern is to be treated as a slump sale, and the assets of the business cannot be dissected and subjected to VAT individually. This can be extrapolated to affirm an already held view that there is no GST applicability on a slump sale transaction.

In this case, although the VAT assessment for FY2010-11 concluded that the transaction was on a “going concern” basis and not subject to VAT, in 2017, a demand of INR2,607 crores (approx. US$314 million) was raised on the ground that the transaction included the transfer of a right to use intellectual property for a fixed period, which constituted a “sale” under Indian VAT law as then applicable.