Resale of construction plant & machinery

[Guest]

Hello Sir,

I m akhilesh joshi government contractor. My firm M/S Subhash joshi construction, barwani m.p. is dealing in government road contract. The issue is my firm Resale of some our plants & Machines and also purchasing reused plant & machines, so that our C.A. is suggested to resale our plant to be charge 18% GST & also purchase reused plants and machines to pay 18% GST.

Is that true? Please guide us with reference of notification no.

Please we are waiting your reply.

Thank you.

Regards

Akhilesh joshi

[Rajagopalan Ranganathan]

Sir,

According to Section 18 (6) of CGST Act, 2017 "In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher:

Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15.

Please refer to rule 44 of CGST Rules, 2017 for method of working out the amount to be paid on removal of the sais goods.

[DR.MARIAPPAN GOVINDARAJAN]

As advised by Shri Rajagopalan,when the used machine is resold the credit availed for that machinery is to be reversed. The rate of GST may vary from machine to machine. Your advise of CA may be correct since he might have analyzed your plant and machineries.

AI Summary

Reversal of input tax credit required on resale of plant and machinery, affecting GST liability on used assets. Resale of plant and machinery requires reversal of input tax credit where credit was taken; the seller must pay an amount equal to the input tax credit reduced by prescribed percentages or tax on the transaction value of the goods, whichever is higher, and Rule 44 prescribes the method for computing the amount, while supplies of certain items as scrap may be taxed on transaction value.