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?

[YAGAY andSUN]

In our view the Customer A is under statutory liability to pay the GST while selling to Machine to B. In GST book adjustment and recovery from third party is allowed.

AI Summary

GST liability on resale persists when an interim owner sells equipment; book adjustment and third party recovery permitted. The interim owner (Customer A) remains under statutory liability to account for GST on the sale to the third party (Customer B). Under GST principles, book adjustment and recovery from a third party are permissible, enabling recovery of the outstanding amount through direct payment arrangements or accounting adjustment, subject to compliance with applicable GST invoicing and accounting requirements.