Order Date- 1 June 2022

Facts:

• The applicant, M/s. Dishman Carbogen Amcis Limited, purchased a new car [SUV of Specifications, Length > 4000 mm, and Ground Clearance > 170 mm] for Rs. 80 Lakhs on 16-02-2018 for use in its business and did not avail GST Input Tax Credit at the time of purchase as it is restricted under Section 17(5) of the CGST Act, 2017. Depreciation was claimed under the Income Tax Act, 1961.

• The applicant intends to sell the same used car for a consideration of Rs. 55 Lakhs. The Written down Value as per books of accounts is Rs. 47 Lakhs at the time of selling. The applicant submits that it intends to sell the car and charge GST in terms of Notification 8/2018 CT(R) dated 25-01-2018.

Issue:

• What would be the taxability of the instant supply?

Order:

• The Authority held that the subject car has engine capacity exceeding 1500 cc, length > 4000 mm, and ground clearance > 170 mm, with diesel as its fuel. As the applicant submits that it has not availed ITC, this used car to fall under the category of sr. no 3 to Notification 8/2018-CT (R) dated 25-1-18.

Key questions and answers:

1. On what value, the new car purchase by the company is sold after using it for business purpose, shall the GST be charged?

Answer: The Value for intended supply shall be the difference between the consideration received for supply of said car and the depreciated value of the said car on the date of supply. Depreciation is as per Section 32 Income Tax Act.

1. At what rate of GST, the new car purchase by the company is sold after using it for business purpose, shall the GST be charged?

     Answer: GST rate leviable is 18% (9% CGST & 9% SGST).

1. Whether the value of old and used car, sold by the company as mentioned above, can be taken as the value that represent margin of the supplier, on supply of such car, and whether the GST can be charged on such margin?

      Answer: Valuation & GST rate of intended supply is as per Ruling at sr. no 1 & 2.

1. The value that represent margin of the supplier, on supply of such old and used goods/Car will be inclusive of GST or exclusive?

Answer: Valuation, as per Explanation (i) to said Notification 8/2018-CT(R), is exclusive of GST, as mentioned below:

(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 of such supply is negative, it shall be ignored