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Section 85 – Liability in case of transfer of business under CGST Act 2017

Detail analysis of notified Rules and the provisions of Section 85 (Liability in case of transfer of business) of the Central Goods and Services Tax (CGST) Act, 2017.

Chapter XVI (Sections 85-94) of the Central Goods and Services Tax (CGST) Act, 2017 deals with provisions related to Liability to Pay in Certain Cases. Section 85 of Central Goods and Services Tax Act, 2017 (12 of 2017) provides for Liability in case of transfer of business under CGST Act 2017.

Recently, we have discussed in detail section 84 (i.e. Continuation and validation of certain recovery proceedings) of CGST Act 2017. Today, we learn the provisions of section 85 of the CGST Act 2017. Complete Details of CGST Section 85 – Liability in case of transfer of business. You may CLICK HERE to download list of all sections of CGST Act 2017 in PDF format.

Notes on Section 85 of CGST Act 2017

Section 85 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017 – Central Tax, G.S.R. 658(E), dated 28.06.2017. In this note, you will learn detail of the provisions of section 85 of CGST Act 2017 read with Central GST Rules 2017.

Section 85(1):

Where a taxable person, liable to pay tax under this Act, transfers his business in whole or in part, by sale, gift, lease, leave and license, hire or in any other manner whatsoever, the taxable person and the person to whom the business is so transferred shall, jointly and severally, be liable wholly or to the extent of such transfer, to pay the tax, interest or any penalty due from the taxable person upto the time of such transfer, whether such tax, interest or penalty has been determined before such transfer, but has remained unpaid or is determined thereafter.

Section 85(2):

Where the transferee of a business referred to in sub-section (1) carries on such business either in his own name or in some other name, he shall be liable to pay tax on the supply of goods or services or both effected by him with effect from the date of such transfer and shall, if he is a registered person under this Act, apply within the prescribed time for amendment of his certificate of registration.

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