GST Applicability on Business Asset Transferred as Personal Asset

[Punit Agarwal]

What is the GST applicability on Business Asset (Inventory: Building Work in Progress) which is transferred as capital Asset in person file due to flat is not sold.

NO ITC is availed by the assessee as it was of Service tax era.

[Shilpi Jain]

If it's a unit where the completion certificate is received, no gst liability

[Punit Agarwal]

What if completion certificate not received till date. As the flat is not yet completed???

[Shilpi Jain]

It can be argued that it is an immovable property which is sold and thereby no gst liability. However the dept would contend it to fall under sch II entry 5b and thereby liable to gst. If commercial 18% else 7.5%

[Punit Agarwal]

Shilpi ji,

I am a bit confused. I suppose I have provided incomplete details about the facts.

Please help me with this complete facts.

The assessee is a private limited company where he has inventory of building which is unsold as on date. The building was of service tax era. No ITC claimed under GST. No completion certificate received till date.

As the company is unable to sale the flat the management has decided to capitalise the assets in the company books of accounts for renting the property in future.

No does the liability to pay GST arises for mere transfer of property from inventory to fixed assets register.

Thanks and regards

[YAGAY andSUN]

Notfn No.05/2019 & 04/2019 https://taxguru.in/goods-and-service-tax/credai-recommendations-gst-november-2020.html

[ABHISHEK TRIPATHI]

Dear Punit Ji,

It's just the book adjustment. Ownership never changes, there is no supply involved. Seems impossible to call the builder/company as a supplier and recipient at the same time.

Stock-in-trade (inventory) to capital assets, to my view, just a book adjustment where ownership never changes. So, if there is no supply then no GST.

[Shilpi Jain]

Agree with Mr. Abhishek. No supply and mere book entry.

AI Summary

GST liability on converting inventory to capital asset hinges on whether the transfer constitutes a supply. Reclassifying unsold building inventory as a capital asset without change of ownership and without a completion certificate raises GST questions. The prevailing view in the discussion is that a mere book adjustment does not constitute a supply and thus does not attract GST liability, though revenue authorities may argue the transfer falls within the provisions treating certain immovable property transactions as taxable when completion status is lacking.