Vat_sale
Querist :
Anonymous
(Querist) 24 January 2012
This query is : Resolved
We have a Private Limited company based out of Bangalore which we are closing down as two main investros are no more interested in running this business. In the process, we would like to sell our assets (more of computers & IT related assets)which has a decent value. We are not registered with Vat as we don't have any domestic sales as we are doing Medical transcripttion work & few other data entry related job to overseas clients. In the process of selling assets do we need to pay VAT or collect VAT ? By the way assets are sold less than book value.
Sailesh Kumar Shah
(Expert) 24 January 2012
Provisions of vat is not applicable in the Sale of assets. However, provisions of income tax is applicable here.
R.Ramachandran
(Expert) 24 January 2012
Dear Mr. Shailesh,
Why do you say VAT is not applicable? Computers etc., are movable goods and therefore would definitely attract VAT.
If the business as a whole is being sold as a going concern, without valuing individual assets of the business, then it will qualify as a 'slump sale' and therefore would not attract VAT.
However, the querist says that they are closing down the business and because of that they want to sell away the Computers etc. Therefore it will definitely attract VAT.
Sailesh Kumar Shah
(Expert) 24 January 2012
Dear Mr. R. Ramachandran,
Author says that "sell our asset" not selling "goods", in these basis, i suggested for non applicability of vat.
R.Ramachandran
(Expert) 24 January 2012
Dear Shailesh,
Thanks.
But, since the querist has clearly said more of computers & IT related assets, I thought you would have appreciated that he was only referring to goods and not any immovable assets.
Any way thanks.
prabhakar singh
(Expert) 24 January 2012
Dear sirs M/S Ramachandran & Shah
This was debate between you two.
What is the consented answer???
R.Ramachandran
(Expert) 24 January 2012
Dear Mr. Prabhakarji,
I have given my answer in the first post itself. If is only sale of computers and other IT related assets, then it will attract VAT.
If the entire business is being sold (including all its assets and liabilities) as a going concern, then it is a slump sale and exempted from sales tax.
prabhakar singh
(Expert) 24 January 2012
@MR.R.Ramachandran !
Thank you very much.
R K JAIN
(Expert) 28 January 2012
The sale of machine under the circumstances the close of the business can not be treated to be a transcation of business nor will it be a transcation of sale of machinery in relation to the business of buying and selling of machinery held in the case reported as 48STC447(MP).
