Sale of Machinery

[Balaji Biradar]

Hello Experts,

My client is having machinery which he had bought in 2016 , since there is no business he closed down the factory . Now he is selling machinery worth 32 lakhs to Bangalore.

1. Whether he needs to take registration in gst , since the turnover exceeds 20 lakhs ?

2. Will it come under the definition of business as it not continuous.

Thanks in advance.

[KASTURI SETHI]

Threshold exemption limit for goods has been increased to ₹ 40/-. from 1.4.2019. States were given option whether to increase the limit to ₹ 40 lakhs or not.

[KASTURI SETHI]

Pl. read as "increased to ₹ 40 lakhs".

Were you registered with the department in 2016 when you purchased machinery ? If so, whether you have taken credit on the said machinery at that time ?

Sale of old and used machinery falls under the definition of "supply" under CGST Act as this supply is in the course of business. It is evident this sale/supply will be from B2B and not from B2C.

Pl.reply to my questions so that correct reply be posted.

[Balaji Biradar]

Sir it's an interstate sale so 40 limit will not be applicable for him.

Yes he was registered under vat and itc was availed .

[KASTURI SETHI]

Follow Section 18(6) of CGST Act read with Rule 40(2) of CGST Rules. You shall pay the amount equal to input tax credit taken as reduced by 5% point as per Rule 40(2) or on the transaction value under Section 15, whichever is higher.

AI Summary

Registration for inter state supply required despite threshold; input tax credit reversal under Section 18(6) and Rule 40(2) applies. Sale of used machinery is a supply in the course of business and an interstate disposal requires GST registration despite intra state threshold limits; where input tax credit was availed on acquisition, the seller must effect the statutory reversal/adjustment of ITC by paying the amount calculated under the prescribed ITC adjustment method or the tax on the transaction value, whichever is higher.