TAX INVOICE IN CASE OF RESALE AFTER PURCHSE IN MARGIN SCHEME

[ARVIND JAIN]

Dear Experts, If any registered dealer has purchased goods from a dealer in second-hand goods issuing Tax invoice and collecting GST on margin as per provision of Section 15(5) and rule 32(5) then the dealer who is purchasing the goods

1. Can Take input tax credit on GST paid on margin amount and Pay full GST at the time of Sale (not margin amount ) as he is doing regular + old goods business together or

2. Do dealer also has the option not to take credit on the purchase of goods taken from second hand dealer (GST on margin amount only ) and sale goods in a similar manner as purchased as per provision of Sec 15(5) and rule 32(5) even if he deals in other regular new goods for which normal Tax provision is followed. Mean to say that this provision can be followed only by a dealer who is 100% doing a sale of second-hand goods or can be done by others in part manner.Waiting for the Experts reply.

Thanks & Regards CA Arvind Jain

[Shilpi Jain]

The dealer can take ITC if he is paying tax on full sale value.

The margin scheme would be applicable based on transaction and is not supplier specific. So for a particular transaction if the supplier satisfies the conditions of that rule he can pay gst under margin scheme irrespective of the fact that he has other regular transactions for which he pays tax under normal scheme.

AI Summary

Margin scheme applicability: dealers may apply margin taxation transaction wise, while input tax credit depends on paying full tax. Claiming input tax credit on GST paid for second hand goods depends on the purchaser's tax treatment at resale: ITC is available if the purchaser pays tax on the full sale value, whereas the margin scheme (charging GST only on margin) may be applied transaction wise for qualifying transactions and is not limited to suppliers exclusively dealing in second hand goods.