Sale of Lorry -GST implication

[VIGNESH]

Sir. Lorry used for business purpose is sold now, Seller and buyer both are registered under GST, Seller has availed ITC on the purchase of Lorry and not claimed Cess. is 1. GST to be charged on the sale Consideration? 2 .Is Compensation cess to be Charged?

[Shilpi Jain]

If this vehicle does not get covered under notification 8/2018-CTR - GST and cess would be liable on the sale.

Why is the doubt?

[VIGNESH]

Thank u mdm for ur reply. Compensation cess on purchase was not claimed or adjusted against ITC , can we setoff the same while selling the Lorry?

[Ganeshan Kalyani]

Refer : Government Exempted the Cess applicable on sale of Used vehicle through Notification No. 1/2018 Compensation Cess Rate

[Padmanathan KV]

1. Since ITC under GST was availed on purchase, Notification No 8/2018 dated 25-01-2018 will not apply and hence, provisions of section 18(6) r.w. rule 40 shall apply.

2. In my opinion, Compensation cess is also applicable since the Entry 42A of Notification No. 1/2017 compensation cess (rate) dated 28-07-2017 shall not apply as ITC has been availed.

[Shilpi Jain]

Looks like some portion of my reply in point 1 is missed to be posted.

I agree with the post by Mr. Padmanathan.

AI Summary

Input tax credit on vehicle triggers GST and compensation cess liability on sale of a used lorry unless exemption applies.
Sale of a business-used lorry where the seller availed Input Tax Credit on purchase generally attracts GST and may attract compensation cess, because notifications exempting used-vehicle sales are commonly held inapplicable where ITC was claimed; ITC reversal and adjustment mechanisms govern tax treatment on disposal.