Mukhtar Ahmed (Contractor) 27 September 2010

Purchase of Movable assets of a Factory at Mumbai.

Dear Sir,

We are going to purchase the entire movable assests like machinery, scrap, electrical etc., along with the buildings to be demolished from a Mumbai party who claims to be the owner of the factory which was closed 3 years back. kindly guide me what are the documents, clearances required from the seller. we have already asked him to furnish, Bank clearance, Electricity clearance, Income and sales tax clearance and labour clearance. Other than these what are the other things to be carefull about the deal. Kindly help us.

Thanking you in anticipation of an early response.

Mukhtar

Bangalore.

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3 Replies

R.Ramachandran (Advocate) 27 September 2010

Clearance from Central Excise Authorities about excise duties / liabilities. Clearance from Municipal Authorities in respect of any of their dues like property tax, water tax etc.

What is the mode of sale being adopted by the seller. Since you are not going to carry on the business i.e. you are not going to run the factory, it cannot be on a 'going concern' i.e. slump sale basis. Rather you would be purchasing the machinery as per their indiviual value - in which case you may have to pay applicable VAT on the same.

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Chirag Bhatt (Manager) 30 September 2010

In my opinion the transaction can be structured to not attract VAT. Since factory is closed for past 3 years Central Excise registration and VAT should have been surrendered. If not, them ask vendor to surrender the same. We can have a discussion off-line to structure the arrangment to not attract VAT.

Regards,

Chirag Bhatt

chiragbhatt.aca@gmail.com

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(Guest)

Thse are the forums that are related to the Indian business firms of law. the topic here is the purchase of the assests are totally good and will also increase the trade.

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