Sale of Old Car as scrap

[Kavita Sharma]

If a firm sells its 15 years old Wagonr car (not in running condition) as scrap, what will be the applicable GST rate on such sale.

Regards

[Rajagopalan Ranganathan]

Madam,

It depends upon by which materials the Wagon car is made of. If it is of Iron then then such scrap is classifiable under heading 7204 and attract 9% CGST vide Sl. No. 199 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017 as amended. If it is any other material then refer to the same notification and find out rate of tax.

[Ganeshan Kalyani]

In my view it should be classified under HSN 8703 attracting 28% plus 1% cess.

[subramanian vijayakumar]

I ENDORSE GANESAN SIR VIEW

[KASTURI SETHI]

I support the views of Sh.Ranganathan Sir.

[KASTURI SETHI]

Dear Querist,

All goods whether made by human-beings or nature have shelf-life. Govt. has fixed shelf life of a car or any vehicle for 15 years. Depending upon upkeep and maintenance, shelf life can be increased by 5 or 10 years.Ultimately a day comes when a car(vehicle) is declared junked because it cannot serve the purpose for which it has been made. When any vehicle or any goods does not serve the purpose for which has been made, becomes junk (or we may say 'scrap'). Thus the character of the goods is changed. Here we cannot call this vehicle a car now. It is a scrap. Any vehicle is made of iron, copper, brass, aluminium, steel etc., so junked car is left with these kinds of scrap. All these kinds of scrap fall under different HSNs i.e. 72,73,74,76 under different sub-heading nos. and attract different rates of tax under GST Tariff Act.

In view of above, old & used car (declared scrap) cannot attract rate of tax under HSN meant for a car.

Here it is worthwhile to mention that the phrase, "scrap generated in the course of manufacture of excisable goods' is a matter of bye gone era and hence not relevant under GST because GST is on supply of goods and services.

[Ganeshan Kalyani]

Do we need to dismantle the car and then sell each and very parts of the car as scrap because its not a car even though it is in the shape of car. Please share your view.

AI Summary

Scrap classification determines GST treatment: categorize a junked vehicle by its constituent metals to apply corresponding GST rates. GST treatment of a junked vehicle depends on its classification as scrap by constituent material rather than as a motor vehicle; such scrap is allocated to metal-scrap HSNs (chapters 72, 73, 74, 76) and taxed at the rates corresponding to those scrap headings, and a practical question arises whether dismantling is required to allocate parts to specific HSN entries.