Goods and Services Tax – Started By: – gopinath lakshmanan – Dated:- 21-8-2017 Last Replied Date:- 17-2-2018 – Dear Sir,Mr.X (employee) is working in Y Ltd (employer). Y bought car from Z Ltd under lease which is group company. Now X got car from Y.car price ₹ 8.11 lakh inclusive of VAT 14.5% (Rs95623). Mr.X is leaving the company and there is no surrender option. Mr.x compulsory to buy the car the invoice price ₹ 7.64 and charging GST @ 29% ₹ 2.21 lakh on Fair Market Value. Is liable to pay GST by employee? if yes, what is the applicable rate under GST law. Pls clarify. – Reply By KASTURI SETHI – The Reply = GST is applicable only if it is proved that such resale is in the course or furtherance of business. If not, it is
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course or furtherance of business as the company is not engaged the business of sale of old and used car. This is not their business. No profit has been earned by the company. Depreciation of the car is also there. Suppose tomorrow the company sells old and used refrigerator, will they pay GST ? No not applicable. Old and and used has to be disposed of ultimately. Before taking any decision, we must know the legal definition of each word , course, business and furtherance.This is my view after thorough analysis. – Reply By Himansu Sekhar – The Reply = Sir, selling a car is a separate transaction. If somebody sells a car which has ultimately be sold in the course of business, then no gst will be applicable to the individual. Otherwise an in
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6 – DELHI HIGH COURT have minutely reviewed the Definition of Business under Section 2 (c) Delhi Sales Tax Act, 1975, which is materially the same as given in CGST Act (Sec. 2(17) – Definition of Business )). The High Court held that: The selling of used cars cannot by any stretch of the imagination be characterized as ancillary or incidental to that business. The assesse never held them for the purpose of sale and purchase, but for using them. At the stage of purchase, they suffered sales tax, which the assessee, as buyer, was bound to pay. The levy of sales tax on an already taxed vehicle with little relation to the business will give rise to an anomaly. The above judgment also deals with the fundamental principles of Taxation which remai
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