• CGTMSE

My father passed away who owned a proprietorship firm and we had govt contracts in the company i used to work with him, we had a cc account with bank of baroda in which the company has utilised around 80 lakhs of limit of fund and non fund based sanction. 

1) we had lein collateral of approximately 40 lakhs the loan was covered under CGTMSE for the rest of amount 


2) How can I continue the business with the bank 


3) what legal process are must to follow and what papers are to be kept for future 

4) Do i need to pay the amount covered under CGTMSE?
Asked 2 years ago in Civil Law

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5 Answers

As per section 22(3) of the CGST Act, the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession, where a business is transferred to another person for any reasons including death of the proprietor. While filing application in FORM GST REG-01 electronically in the common portal the applicant is required to mention the reason to obtain registration 

 

2) you can continue the business after changing the bank account , PAN card in your name . father bank account will be closed by the bank 

Ajay Sethi
Advocate, Mumbai
97525 Answers
7890 Consultations

In the case of a sole proprietary business concern, the proprietor and his business are one and the same. 

In case of death of the sole proprietor, his legal heirs can legally continue the business

a legal heir can transfer the ITC to a new entity in case of death of sole proprietor. In such a case, legal heir needs to get a new registration under GST and transfer the ITC through FORM GST ITC-02 to this new entity.

Once the new registration is approved, Legal heir has to apply for the transfer of ITC by filing FORM GST ITC–02 to new entity. However, there is no restriction on filing of ITC-02 pre or post cancellation. It is an independent form and has no relation with cancellation of the sole proprietorship firm.

In a sole proprietorship, when the business owner dies, the business is essentially concluded and all assets and debts pass through his estate. The sole proprietor's will can pass the business onto a certain beneficiary, but that creates a new sole proprietorship (or partnership if more than two beneficiaries).

T Kalaiselvan
Advocate, Vellore
87727 Answers
2358 Consultations

Dear Client,

CGTMSE welcomes any renewal of guarantee cover beyond 5 years on a payment of applicable guarantee fee.

The guarantee cover given by the Trust to the lender in respect of credit facility to a particular borrower will lapse if
i. It is subsequently brought to the knowledge of the Trust that the lender has obtained collateral / third party guarantee from the borrower while sanctioning the particular credit facility which has been covered under the guarantee, however, MLIs will be allowed to obtain collateral security for a part of the credit facility, whereas the remaining part of the credit facility, up to a maximum of ₹ 200 lakh, can be covered under Credit Guarantee Scheme of CGTMSE.
ii. It is subsequently gathered that the lender has advanced second / subsequent credit facility to the borrower with collateral / third party guarantee and extended the scope of collateral / third party guarantee to the existing credit facility for which guarantee cover has been obtained from the Trust.
iii. Annual service charge is not paid to the Trust by the specified period or such extended time limit as may be granted by the Trust.
iv. The tenure of guarantee cover has expired.

CGTMSE had also introduced a new “Hybrid Security” product where the MLIs will be allowed to obtain collateral security for a part of the credit facility, whereas the remaining unsecured part of the credit facility, upto a maximum
of ₹200 lakh, can be covered under CGS-I. CGTMSE will, however, have notional second charge on the collateral security provided by the borrower for the credit facilities extended. Under the hybrid security product, there is
no requirement for MLIs to create security / charge in favour of CGTMSE by way of legal documentation.

 

Thank You.

Anik Miu
Advocate, Bangalore
10398 Answers
121 Consultations

If you can carry on the partnership after the death of your father according to your deed of partnership, you need to inform the bank of his death and also of your intention to continue the business, in writing. Comply with the bank's documentation formalities. CGTMSE cover will continue to be available.

Swaminathan Neelakantan
Advocate, Coimbatore
2961 Answers
20 Consultations

2 you need to be the proprietor now

3 Just you being the proprietor and related shop and establishment licenses.

4 If you are accepting his liabilities or profits then yes otherwise no

 

Prashant Nayak
Advocate, Mumbai
32881 Answers
209 Consultations

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