Liability in case of transfer of business
Commencement. 22nd June, 2017 for sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 1st July, 2017 for sections 6 to 9, 11 to 21, 31 to 41, 42 (except proviso to sub-section (9) of S 42), 43 (except proviso to subsection (9) of S 43), 44 to 50, 53 to 138, 140 to 163, 165 to 174.
Section 85 of the Central Goods and Services Tax Act, 2017 deals with liability in case of transfer of business. 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 whol The Act was enacted on 12 Apr 2017.
(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 up to 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.
(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.
Section 85, The Central Goods and Services Tax Act, 2017 (Act 12 of 2017).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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JR Metal Chennai Ltd. v. Assistant Commissioner of Central Tax
Court's Decision & Legal Precedent
DATE VERIFIED Final Order 08.05.2024 (order-1.pdf): DB extracted s.85 and held whether asset purchase equals “transfer of business” is a disputed fact for the appellate forum (citing going-concern/successor tests); dismissed writ for alternative remedy without deciding the s.85 merits against the assessee.
On this section: s.85 “transfers his business” construed — mere sale of plant/land/building assets is not automatically transfer of business; factual successor test belongs in appeal.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
1 instrument names this provision in its title or its text without being made under it.
Questions about Section 85
What have the courts held on Section 85 of the Central Goods and Services Tax Act?
JR Metal Chennai Ltd. v. Assistant Commissioner of Central Tax (08 May 2024) is the leading judgment on this section among those set out below: s.85 “transfers his business” construed — mere sale of plant/land/building assets is not automatically transfer of business; factual successor test belongs in appeal.
How do I find court cases under Section 85 of the Central Goods and Services Tax Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: CGST Act 85, section 85 CGST Act, section 85 of the Central Goods and Services Tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with JR Metal Chennai Ltd. v. Assistant Commissioner of Central Tax (08 May 2024).
What should I read with Section 85 of the Central Goods and Services Tax Act, and has it changed?
One instrument names it without being made under it, most recently Circular No. 96/15/2019-GST dated 28.03.2019 (2019).
When was Section 85 of the Central Goods and Services Tax Act enacted?
Section 85 of the Central Goods and Services Tax Act, cited as CGST Act 85, was enacted on 12 Apr 2017 as Act 12 of 2017. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5109 words
- 142. Miscellaneous transitional provisions1966 words
- 140. Transitional arrangements for input tax credit1883 words
- 54. Refund of tax1858 words
- 110. President and Members of Appellate Tribunal, their qualification, appointment, conditions of service, etc1647 words
- 74A. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onward1299 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.