Sale of Old Machinery on which Input Credit not taken earlier

[ROHIT GOEL]

We are running a hospital, and we are selling an old MRI machine, no input credit was taken at the time of purchase as our services are not liable to any output tax.

My query is whether GST needs to be charged on Transaction value on Sale of old Machinery although we have already paid tax at the time of purchase without input tax credit?

[Ganeshan Kalyani]

gst is payable on transaction value.

[KASTURI SETHI]

The term, “supply” has been inclusively defined in the Act. The meaning and scope of supply under GST can be understood in terms of following six parameters, which can be adopted to characterize a transaction as supply:

1. Supply of goods or services. Supply of anything other than goods or services does not attract GST

2. Supply should be made for a consideration.

3. Supply should be made in the course or furtherance of business.

4. Supply should be made by a taxable person.

5. Supply should be a taxable supply

6. Supply should be made within the taxable territory.

Do you think your activity qualify to parameter no. 3 ? If supply is not in the course or furtherance of business, it is not taxable.

[YAGAY andSUN]

We endorse the view of Mr. G Kalyani as even in the cases of old cars when sold by corporates/factories to their employees do not fall under the category of furtherence of business but under GST regime GST is still payable. Therefore, MRI Machine would also attract GST on transaction value, if any, at the time of its'sale/disposing off. However, due to having Electro Magnetic field such selling should be according to norms as set by Environmental Laws and other applied laws.

[KASTURI SETHI]

Dear Querist,

What is constitution of 'hospital' mentioned in your query ?

[KASTURI SETHI]

Whether hospital is run by charitable trust or corporate body ? If by charitable trust, whether registered under Section 12 AA of Income Tax Act ? Dear querist, Information is required to further explore the issue.

[ROHIT GOEL]

It's a charitable trust

[ROHIT GOEL]

@Kasturi Sethi

Hospital is run by a Charitable Trust registered u/s 12AA of IT Act. Output Service is not taxable and no credit is availed/available.

[KASTURI SETHI]

Then exemption is available under Notification no.12/17-CT Rate.

[Ganeshan Kalyani]

Outward service is exempted but outward supply of asset is taxable at applicable rate. Tax has to be paid on transaction value or open market value.

[YAGAY andSUN]

We endorse the view of Mr. G Kalyani.

AI Summary

GST on sale of hospital assets: transaction value taxable even if no input tax credit was claimed. Sale of a hospital's old MRI machine is taxable where the disposal qualifies as a supply under GST; tax is payable on the transaction value or open market value even if no input tax credit was availed. While a charitable trust registered under the tax statute may benefit from certain exemptions, outward supply of assets on sale remains taxable unless specifically exempted.