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

Client Selling Machinery Interstate Must Address GST Registration & ITC Repayment Under Section 18(6) of CGST Act. A client closed his factory and intends to sell machinery purchased in 2016 for 32 lakhs to Bangalore. He inquires whether GST registration is required, given that the turnover exceeds 20 lakhs, and if the sale qualifies as a business activity. An expert clarifies that the threshold exemption limit for goods is 40 lakhs, effective from April 2019, but this does not apply to interstate sales. Since the client was registered under VAT and availed input tax credit (ITC), he must follow Section 18(6) of the CGST Act and Rule 40(2) of the CGST Rules regarding ITC repayment.