TaxTMI 
TaxTMI 
My client started a new business wherein he purchases the old vehicle from bank in an auction Bank gives release letter in the name of my client and he then finds the customer for the vehicle and sell it to the end customer. However, the RC of the vehicle is directly transferred from Bank to the end customer. In such a case, where the title of the goods is not transferred to my client as per Motor vehicle Act. Can the valuation be made under Rule 32(5).
Dealing in Second hand goods
23 Jun 2020 
6 Replies 
5946 Views Asked by
Valuation of second hand goods under Rule 32(5) allows margin based GST valuation even without transfer of vehicle registration.
Rule 32(5) permits valuation of supplies by dealers in second hand goods on a margin basis where no input tax credit was taken, with negative margins ignored. The proviso deeming purchase value for repossessed goods applies to bank repossessed vehicles sold after auction. Transfer of registration under motor vehicle law is not a stipulated precondition for applying the margin scheme; legal ownership can differ from registration, enabling dealers to use Rule 32(5). Notification exemptions complement the scheme to prevent double taxation on resale of used goods. (AI Summary)
Rule 32(5) permits valuation of supplies by dealers in second hand goods on a margin basis where no input tax credit was taken, with negative margins ignored. The proviso deeming purchase value for repossessed goods applies to bank repossessed vehicles sold after auction. Transfer of registration under motor vehicle law is not a stipulated precondition for applying the margin scheme; legal ownership can differ from registration, enabling dealers to use Rule 32(5). Notification exemptions complement the scheme to prevent double taxation on resale of used goods. (AI Summary)