GST on sale of Commercial Goods Vehicles

[Suresh P]

A Commercial Goods Heavy Vehicle was bought in pre gst era 2001 and sold in GST era in August 2017 what is the GST rate including cess applicable on such sale and how the taxable value is computed if no GST was collected along with sale consideration.

[KASTURI SETHI]

(1) Yes. GST is applicable on old and used second hand vehicles. You are to pay tax on transaction value (depreciated). Rate of tax has been mentioned in Notification No. 8/2018-CT(Rate) dated 25.1.18. Rate depends upon engine capacity etc. Pl. go through the conditions mentioned in the above notification carefully. The tax structure mentioned in above notification shall not apply, if ITC/Cenvat Credit or input credit of VAT has been availed.

(2) Exemption to old and used Motor Vehicles from Compensation Cess has been granted vide- Amendment to Notification No. 1/2017-C.C. (Rate) vide [Notification No. 1/2018-C.C. (Rate), dated 25-1-2018]

[Suresh P]

Thanks for your kind reply.

But if the sale has taken place on 11/09/2017, is that notification applicable as it is notified subsequent to the date of sale. Would the law applicable on the date of sale( 11/09/2017) be considered to tax the consideration. The depreciated value of the old vehicle is NIL

Will it make any difference if the ITC has been taken or not in Pre GST era.

Tnx in advance.

[KASTURI SETHI]

Prior to Notification No.8/2018-CT(Rate) dated 25.1.18, an other scheme was available. In case Cenvat Credit/Input Credit was not availed in pre GST era, the value for calculation of GST was 65% of the transaction value (35% abatement). Rate mentioned under Notification No.1/17- CT(Rate) dated 28.6.17 at serial No.165. In case the transaction value is less than depreciated value of the old vehicle, in that case margin scheme will be ignored and GST will be calculated on the basis of depreciated value.

If Cenvat Credit was availed in pre-GST era, the concession provided under notification No.8/2018 -CT(Rate) dated 25.1.18 and abatement of 35% (prior to 25.1.18) would not be available.

[Suresh P]

Thank you Sir. Appreciate your in depth knowledge and helping mind.

I solved my case in the following way. My old vehicle will fall under 8704

The relevant Heading No is 8704 for Vehicle used for Transportation of Goods other than Refrigerated.

Rate as per Noti No 1/2017 CT(Rate) 28.06.2017 is 28% and the applicable Cess as per Noti No. 1/2007 Compensation Cess(Rate) dtd 28/06/2017 is NIL.

Subsequent Noti No 37/2017 CT(Rate) was made on 13/10/2017 where goods falling under Chapter 87 shall be charged to tax at the rate of 65% of GST Rate as per Noti 1/2017 (ie 35% abatement) If

(1) Supplier is a Regd Person

(2) Vehicle was bought before 1/7/2017 and

(3) NO ITC was availed under earstwhile Tax Laws.

If ITC was availed under earstwhile tax laws, GST rate would be same as notifed under Noti 1/2017.Ie(28%).

One more notification 8/2018 dtd 25.01.2018 my be referred to on the subject matter reducing the rate on sale of old vehicle falling under heading 8703 and 87 subject to certain conditions.

As there are a number of notification on the sale of old motor vehicle carrying goods or passengers, a thorough understanding of notifications is a must.

[KASTURI SETHI]

Dear Sh.Suresh P. Ji,

I agree with you but pl. clarify the following point:-

You have mentioned as "The relevant Heading No is 8704 for Vehicle used for Transportation of Goods other than Refrigerated." but Heading No. 8704 stands for refrigerated motor vehicles.

Will you pl. clarify ?

[Suresh P]

Sir,

Appreciate your curiosity and it triggers me to investigate further and confirm at best of my knowledge.

Chapter 87 principally covers Vehicles other than Railway or Tramway Rolling Stock and parts and accessories there of.

Tariff Item 8704 covers

(1) Electrically operated Vehicle incl 2 and 3 wheeled Electric Vehicle

(2) Refrigerated Motor Vehicle and

(3) Motor vehicle used for the transportation of goods other than refrigerated vehicles with Codes from 87041010, 87041090, 87042110, 87042120, 87042190, 87042211, 87042219, 87042290, 87042311, 87042319, 87042390, 87043110, 87043120, 87043190, 87043211, 87043219, 87043290, 87049011, 87049012, 87049019, 87049090 at various rates.

Thank You Sir...

[KASTURI SETHI]

Dear Sir,

Really you are a knowledgeable person as well as an expert. You are hard worker.You have unquenchable thirst for knowledge.It is no exaggeration pl.

AI Summary

GST on sale of used commercial goods vehicles depends on notifications, abatements and prior input credit status. GST applies to sales of used commercial goods vehicles; taxable value and rate depend on applicable notifications and whether pre GST input/cenvat credit was claimed. Abatement treating 65% of transaction value as taxable applied where no prior credit was taken, but if transaction value is below depreciated value tax is computed on depreciated value. If prior input/cenvat credit was availed, concessions and abatement are not available and the full notified rate applies. Notification amendments also affect compensation cess treatment and tariff classification informs rate selection.