Goods and Services Tax – Started By: – DK AGGARWAL – Dated:- 24-11-2017 Last Replied Date:- 5-9-2018 – Sirwe want to sell the old car purchased before July 2107, registered in the name of Firm to another firm duly registered under GST.Please inform if GST is applicable on sale of old car and if so whether GST input is available to the new buyer.Please inform the rate of GST if applicableRegardsD K Aggarwal – Reply By ANITA BHADRA – The Reply = Dear Sir Yes , GST is applicable .. As per schedule 1 of CGST Act , permanent disposal of business Assets will be treated as supply . Rate of GST will be 28% ITC will not be available to New buyer as sec 17(5)(a) of CGST specifically states- ITC will not be available in respect of Motor Vehicle subject to certain conditions ie further supply of motor car etc etc . Regards CA Anita Bhadra – Reply By Ganeshan Kalyani – The Reply = GST is applicable @ 28% plus cess. – Reply By KASTURI SETHI – The Reply = There has been lengthy discussion on this is
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of supply…………………….in the course of furtherance of business. Reference should be made to definition of Business as placed in Sec 2(17) of CGST Act. In the present case, the company business is not to sell the Cars and it has been held in catera of judgments that if the business is not done with an intention to sell cars, then the activity can't be classified as Business activity. In order to be supply, above essentials is must or else GST is not applicable. In short, depends upon the supplier whether he would like to take chance or not to fight the case if he opts for non payment of GST. Interesting point to make note. Suppose person A (not in Business of Cars sales / purchase) in GST purchase Motor Vehicle and sells off after 2 years. He is not eligible to take ITC as per Sec 17(5) of CGST Act. If he is forced to pay GST at the time of sale, he stands to loose as double taxation arises. Suppose person B (who is in Business of Cars sales / purchase) in GST purchase M
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price and the selling price of the second hand car (to the third person).RegardsS.Ramaswamy – Reply By CS SANJAY MALHOTRA – The Reply = Sh. Ramaswamy ji, It's not clarification but Notification No CGST 10/2017 dated 28.06.17 which is applicable to Dealer of Second Hand goods operating under Margin Scheme. – Reply By KASTURI SETHI – The Reply = and Querist or his company is not a dealer of second hand goods. – Reply By Ramaswamy S – The Reply = Thank you Mr Sanjay. I stand corrected. Its notification 10/2017 (post the clarification that I received from GST council through sms). – Reply By Ramaswamy S – The Reply = I do not see it as a double taxation. The reason is as follows:1. The sale of used car – disposal of asset and is a supply. Outward GST is applicable.2. The reduction in the rate of tax at 65% of the CGST rate if the credit is not availed. Since ITC is not available, there is a reduction in the rate of tax, else the rate of tax would be the same at 28% +cess.RegardsS.Ramas
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ou have gone into depth. Really it is peerless. Your come back in this forum has infused life in it. No. of questions per day has increased appreciably. I am relishing your replies. Thanks. – Reply By balasundaram t – The Reply = I agree with CA Sanjai Sir – Reply By Ramaswamy S – The Reply = I would like to refer to rule 32(5) of the CGST Rules which is akin to the case here. 32(5) – where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored. It is highly prone to litigation yet nevertheless worth exploring. regards S.Ramaswamy – Reply By CS SANJAY MALHOTRA – The Reply = Sh, Ramaswamy ji,Present issue does not focus
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7 by the buyer. 1) From the above discussion it is clear that, as the car was purchased before 01.07.2017, there is no question of levy of GST while purchasing of impugned car by the original buyer, accordingly there is no question of availment of Input tax credit & IDEALLY GST SHALL NOT BE LEVIED ON SALE OF OLD CAR. 2) Suppose the car was purchased after 01.07.2017, then also availment of Input tax credit is restricted by sec 17(5) & IDEALLY GST SHALL NOT BE LEVIED ON SALE OF OLD CAR. The Schedule-II deals with ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES The Entry 4 of Schedule 2 reads as under. 4. Transfer of business assets (a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person; According to Schedule II , the sale o
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(d) of sec 7(1) , THE SALE OF OLD CAR WILL BE LIABLE TO GST. AS RIGHTLY SAID THE TAX & CESS RATE WILL BE SAME AS THAT OF NEW MOTOR VEHICLES ON 65% VALUE. ALTHOUGH LOGICALLY IT IS NOT CORRECT TO CHARGE GST ON SALE OF OLD CAR BECAUSE OF DOUBLE TAXATION, STILL AS PER THE PREVALENT LAW AS ON TODAY GST IS LEVIABLE TILL THE SAME IS STRUCK DOWN BY THE COURTS. – Reply By Venkatesh S – The Reply = Dear Sanjay,Reduction of 35% in cess rate is applicable only for leased vehicles. My understanding is it is not applicable on sale of used cars. – Reply By CS SANJAY MALHOTRA – The Reply = Mr. Venkatesh, Request you to go through Point No 2 of Notification No 37/2017-CGST besides GST Council Press Release. Afterwards views most welcome. – Reply By Keyur Mehta – The Reply = Dear Mr. Sanjay and Mr. Rajesh,Your contribution on this post has been highly enlightening and detailed. A very healthy discussion. However, most confusing to conclude. View presented by Mr. Rajesh leads to the conclusion that o
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s used in business and now need to dispose off the MV but not clear as to GST impact on such transaction ? Both the arguments : 1) permanent disposal of business Assets- treated as supply and 2) Double taxation of transaction are compelling. Kindly guide. – Reply By Vijay Singh – The Reply = After noti.no.08/2018 CGST (r) dtd.25.01.2018. Pl explain the situation.. – Reply By Vijay Singh – The Reply = Pl explain the below situation.. If the depreciated value is 6L and selling price is 5.5 than if a firm want to sell a used car within the state .. what tax he have to pay. Please refer the point 1 for purposes of this notification, – (i) in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act,1961(43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply, and where the margin o
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