Section 108 of Model GST law of India covered Liability in case of transfer of business

Transfer of Business

Where any person liable to pay tax, transfers his business in whole or part, by sale, gift, lease, leave and license, hire, or in any other manner, then such person and the  person to whom the business is transferred shall jointly and severally be liable to pay the tax, interest or penalty due from the taxable person up to the time of such transfer, whether such dues has been determined before such transfer, but has  remained unpaid or is determined after such transfer.

The liability of transferee shall be automatic irrespective of :

1. Consideration
2. Mode and manner of transfer
3. Transfer in whole or part
4. Determination or not of liability

The only pre-requisite is that such tax liability should have remained unpaid or is   determined after such transfer.

The transferee or lessee shall be jointly and severally liable to pay –

• Tax
• Interest
• Penalty

due from or payable by such payable person (transferor)

The transferee may carry on business in his own name or some other name. He shall–

1. get his certificate of registration amended appropriately within prescribed time.
2. pay GST w.e.f. date of transfer on taxable supply of goods and / or services

Business transfers covered under section 109 would inter alia include  –

1. Sale,
2. Gift,
3.  Lease,
4.  Leave and license
5.  Hire, or
6.  In any other manner (e.g. , exchange, rental, disposal etc.)

Chapter XXII of the Model GST Law contains Chapter XXII comprising of sections 108 to 115 which deal with liability to pay GST in eight special cases as follows :

Free Education Guide on Goods & Service Tax (GST)