SALE OF MODIFIED COMMERCIAL VEHICLE

[Asked by Guest]

RESPECTED EXPERTS,

MY ASSESSES IS A REGISTERED AS A GTA UNDER GST, HE HAS PURCHASED COMMERCIAL VEHICLE WITH HSN CODE 8706 & THEREAFTER VEHICLE IS MODIFIED WITH TANKER UNDER HSN CODE 7310. WE HAVE NOT TAKEN ANY ITC TAKEN ON IT AND DEPRECIATION IS CLAIMED UNDER INCOME TAX ACT,1961. NOW WE ARE SELLING OUR VEHICLE AT THE PRICE BELOW WDV. QUERY IS AS BELOW:

(1) WHETHER ASSESSEE CAN AVAIL BENEFIT OF CGST NOTIFICATION NO.8/2018 DATED 25/01/2018 WHICH DEALS IN GST RATE ON SALE OF OLD/USED VEHICLE. IF YES WHETHER TAX NEED TO BE PAID AS THE ASSESSEE MARGIN IS IN NEGATIVE ( DIFFERENCE BETWEEN WDV AND SALE PRICE).

(2) WHETHER GST IS TO BE CHARGED ON SALE VALUE, IF ASSESSEE DOES NOT FALLS UNDER ABOVE MENTIONED NOTIFICATION NO.8/2018 DATED 25/01/2018 CGST NOTIFICATION.

AI Summary

Margin scheme for second hand vehicles: no GST if margin is nil or negative on resale.
A used commercial vehicle modified with a tanker remains a second hand good and qualifies for the margin scheme: taxable value equals the difference between selling and purchase price (plus any added value from repairs/refurbishing), and where this margin is nil or negative no GST is charged. Under the scheme the purchaser cannot claim input tax credit on such purchases and the original unregistered seller does not issue a taxable invoice; notifications grant central tax exemption when tax is paid on the margin.