GST on re-possessed asset by Nationalized Bank

[SHARAD ANADA]

A nationalized bank repossessed assets from defaulting borrower who is registered under GST. The original cost of plant and machinery purchased by the borrower before 2 years was 50 lakh and GST paid by him was 9 lakh. Bank is able to sale this machinery at 25 lakh. Amount outstanding in the borrower account is 27 lakh. On what value GST will be applicable.

[DR.MARIAPPAN GOVINDARAJAN]

In my view margin scheme under Rule 32(5) will be appliable. Since the second sale is less than the first sales, no GST will be attracted.

Views of experts are solicited.

[Mahir S]

If the Assets is repossessed from the defaulting borrower, then purchase price (of second hand purchaser -- herein Bank) in such case will be calculated as Original Purchase price less Five percentage points for every quarter or part thereof.

[SHAILENDRA PORWAL]

Proviso to Rule 32(5) is applicable for defaulting borrower who is unregistered. Hence, for URP borrower, Purchase Price will be equal to Purchase Price reduced by five percentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession. In case of Registered borrower, whole consideration shall be taxable

AI Summary

GST on repossessed assets: treatment hinges on application of Rule 32(5) and borrower's registration status.
GST on bank sales of repossessed assets depends on the margin scheme under Rule 32(5) and the borrower's registration status: one view holds that resale below the original price attracts no GST under the margin scheme; another applies a time-based reduction to determine purchase price for second-hand goods; a separate interpretation treats sales from repossession by a registered borrower as fully taxable while applying the reduced-purchase-price rule only for unregistered borrowers.