Vat on Sale of Company Vehicle

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Dear Learned Members,

Ours is a partnership company engage in the manufacture of engineering goods which attract basic VAT at the rate of 5 percent & Excise Duty at the rate of 12 percent on all goods Sold. We have Company owned Cars purchased  about 5 Years back, used for the partners & employees of the company and are not a part of manufacturing. We didnot avail any input credit of VAT  during purchase. However did avail depriciation on the total purchase price, as per the rules while computing Income Tax.

Now We wish to Sell the same & buy New Vehicles. Please Advise (a) are we supposed to Charge VAT on sale? (b) if Yes  at what Rate? (c) If we Exchange the vehicle thru the dealer for new and pay the difference of price as payment and on payment of full tax on new vehicle, how would we treat the same?

Look forward the reply with supporting rules/case ref.

Thanks

AI Summary

Engineering Firm Seeks Guidance on VAT for Selling Company Vehicles; Examines Legal Judgments and Tax Regulations. A partnership company in the engineering goods sector seeks advice on whether VAT should be charged on the sale of company-owned vehicles, which were purchased five years ago and used by partners and employees. They did not claim VAT input credit at purchase but claimed depreciation for income tax purposes. The query includes whether VAT should be charged on the sale, the applicable rate, and the treatment of vehicle exchanges through dealers. Responses refer to specific legal judgments and tax regulations, highlighting differences in VAT treatment between Haryana and Delhi, and discussing relevant case law regarding the inclusion of such sales in turnover.