GST on Sale of Machinery where ITC has not been availed

[Pradeep Singhi]

Sir,

A Private Ltd. Co. running a hospital purchased a machinery in GST regime & ITC was not availed on the same as output service (Healthcare service) is exempted.

Now, the machinery is sold by the Hospital to another Hospital (a Partnership Firm).

1. Whether GST is payable by the hospital while selling the Machinery?

2. If payable, then since the ITC was not taken earlier & hospital purchasing the machinery is also not eligible to avail ITC, whether it will tentamount to double taxation on these type of transactions?

3. Any case laws related to this type of transactions?

AI Summary

GST on sale of used machinery applies irrespective of prior ITC, raising potential double taxation concerns.
Sale of used machinery by a taxable person is a taxable supply and attracts GST on the transaction value regardless of whether Input Tax Credit was availed at purchase or whether the purchaser can claim ITC. In practice, ineligibility or blocking of ITC due to exempt outward supplies can produce a practical double taxation effect across the supply chain, a structural concern noted in sectoral examples.