Implication of GST & Income tax on purchase of a second hand machine

[Kishore Padav]

Our Company had sold an equipment to a customer (A) in May 2017 @ ₹ 20 lakhs (incl. CST). The customer (A) has paid us only ₹ 7 lakhs till date.He has expressed his inability to pay the balance ₹ 13 Lakhs and has asked the company to take back his machine or help him sell his machine. Now we have found a customer (B) who has agreed to purchase the machine @Rs.13 Lakhs from him. Since the company has to recover ₹ 13 lakhs from csutomer (A), it is insisting on getting the payment to be made directly to them by customer (B).

So in this deal, I have some queries

1 > Is GST applicable in this deal as Customer (A) is reselling the machine at a loss to Customer (B) ?

2 > Can company take payment from Customer (B) directly in its name.?

3 > Can customer (A) give an invoice to cutomer (B)?

4 > What are the income tax implications on Customer (B) ?

5 > Can he show machine purchased from Customer (A) in his ITR? and what are the documents required from Customer (A) to transfer the ownership of the machine to Customer (B)

6 > Can customer (B) claim depreciation on the machine in future?

AI Summary

Company Seeks Direct Payment from Customer B; GST and Tax Implications on Resale Addressed A company sold equipment to Customer A for 20 lakhs, but only 7 lakhs was paid. Customer A, unable to pay the remaining 13 lakhs, seeks to sell the machine to Customer B for 13 lakhs. The company wants Customer B to pay them directly. Queries include GST applicability on the resale, direct payment to the company, invoicing between Customers A and B, income tax implications for Customer B, documentation for ownership transfer, and future depreciation claims. The response indicates that Customer A must pay GST on the sale to Customer B, and book adjustments are permissible under GST regulations.