2022 (6) TMI 133 - AAR - GST

Used Car Sale Without Input Tax Credit: GST Payable on Margin Between Sale Price and Depreciated Value at 18%

In Re: M/s. Dishman Carbogen Amcis Limited,

The AAR ruled on GST implications for a business-used car sold without input tax credit. For valuation, the taxable amount is the difference between sale ... Quantification of GST - calculation of tax on new car purchase by the company is sold after using it for business purpose - rate of GST - 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? - Whether the value that represent margin of the supplier, on supply of such old and used goods/Car will be inclusive of GST or exclusive? 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. 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 - GST rate leviable is 18% - Valuation, as per Explanation (i) to said Notification 8/2018-CT(R), is exclusive of GST. Issues:1. Valuation of a new car sold after use in business for GST purposes.2. Applicable GST rate on the sale of a used car used for business purposes.3. Determination of the value representing the margin of the supplier for an old and used car sale.4. Inclusion of GST in the margin value for the supply of old and used goods.Issue 1 - Valuation of the new car sold after business use for GST: The applicant purchased a new car for business use without availing GST Input Tax Credit. The car was intended to be sold for Rs. 55 Lakhs, with a Written Down Value of Rs. 47 Lakhs at the time of sale. The Authority found the car to fall under a specific category of old and used motor vehicles as per Notification 8/2018-CT(R). The ruling stated that the value for the intended supply would be the difference between the consideration received and the depreciated value of the car on the date of supply, as per Section 32 of the Income Tax Act.Issue 2 - Applicable GST rate on the sale of a used car: The Authority ruled that the GST rate leviable on the sale of the used car would be 18%, comprising of 9% CGST and 9% SGST. This determination was made based on the specific category the car fell under as per the relevant notification.Issue 3 - Determination of the margin value for an old and used car sale: The Authority clarified that the value representing the margin of the supplier for the sale of the old and used car would be exclusive of GST. This valuation was to be calculated as the difference between the consideration received for the supply of the car and the depreciated value of the car on the date of supply, as per the provisions of the Income Tax Act.Issue 4 - Inclusion of GST in the margin value for old and used goods: The ruling specified that the valuation, as per the Explanation (i) to the relevant notification, would not include GST in the margin value for the supply of old and used goods. This decision ensured that the margin calculation remained exclusive of any GST component.