GST on sale of used Tipper by Contractor.

[Venkatesh Dhongadi]

One of my client who is a Govt. contractor bought tipper for his use in Govt. works during FY 2015-16 and VAT ITC was not taken. Now during this FY this tipper was sold for 17.56 lakhs. WDV as per books was Rs. 11.70 lakhs. GST has to be paid on Sale value of Rs. 17.56 or only on profit amount of Rs. 5.86?

[Shilpi Jain]

You may have to look at Notification No. 8/2018-CT R to determine if tipper is covered in the HSN's mentioned therein.

If covered then you could pay GST on the profit.

[KASTURI SETHI]

Tipper does not fall under Chapter 87. It is covered under Chapter 84.

[Venkatesh Dhongadi]

Thank you Shipli Jain Madam and K. Sethi Sir.

[K.lakshmipati rao]

Tipper vehicle falls under “8704 – Motor vehicles for transportation of goods. Refer to Notification No.8/2018-Central Tax(Rate) dated 25-01-2018 - Explanation (i) or (ii) as applicable.

[KASTURI SETHI]

Tippers are classifiable under Chapter 84 ----------CESTAT. It is a machinery.

2006 (1) TMI 313 - CESTAT, MUMBAI - COMMISSIONER OF C. EX., VADODARA Versus DIPCO METAL FABRICATORS PVT. LTD.

 

[K.lakshmipati rao]

If Querist has sold used Tipper-Vehicle, then, applicable HSN Code is 87042319. For answer, he can refer to my earlier reply - Notification No.8/2018-Central Tax(Rate) dated 25-01-2018 - Explanation (i) or (ii), whichever is applicable.

[KASTURI SETHI]

Sh.Venkatesh Dhongadi Ji,

I made thorough search again on the issue raised by you.

(i) The issue of classification of 'TIPPER' has been decided by the Supreme Court. So the judgement of the Supreme Court is posted here in the interest of all readers/visitors of TMI. Read word for word carefully before taking decision.

"(1) Motor vehicles used to carry loads and capable of off-loading but not exclusively meant for off-road use, classifiable under Tariff Item 8704 23 90of Central Excise Tariff as tipper trucks and not under sub-heading 8704 10 as dumpers (2) Chassis fitted with engine classifiable under Tariff Item 8706 00 42 of Central Excise Tariff (3) Demand of differential duty on goods exported under the claim of rebate not sustainable on the ground of revenue neutrality

The Supreme Court Bench comprising Hon’ble Mr. Justice Deepak Gupta and Hon’ble Mr. Justice Aniruddha Bose on 20-9-2019 after condoning the delay dismissed the Civil Appeal Diary No. 42201 of 2018 filed by Commissioner of Central Excise and Service Tax, Indore against the CESTAT Final Order Nos. A/50795-50799/2018-EX(DB), dated 26-2-2018 (V.E. Commercial Vehicles Ltd. v. Commissioner - 2018 (3) TMI 256 - CESTAT NEW DELHI). While dismissing the appeal, the Supreme Court passed the following order :

“Delay condoned.

We are not inclined to interfere with the order passed by the Customs, Excise and Service Tax Appellate Tribunal at New Delhi.

The civil appeals are accordingly dismissed. Pending application, if any, stands disposed of.”

The Appellate Tribunal in its impugned order had held that the motor vehicles meant to carry loads and capable of off-loading but same not being machines exclusively meant for off-road use, are classifiable under Tariff Item 8704 23 90 of Central Excise Tariff as tipper trucks and not under sub-heading 8704 10 of the said Tariff as dumpers.

The Tribunal had also held that the chassis fitted with engine is classifiable under Tariff Item 8706 00 42 of Central Excise Tariff.

The Tribunal had further held that the demand of differential Central Excise duty on the chassis fitted with engine which are exported under the claim of rebate, is not sustainable as the same would be available to the assessee as rebate leading to a revenue neutral situation.

[Commissioner v. V.E. Commercial Vehicles Ltd. - 2019 (9) TMI 887 - SC ORDER]

[KASTURI SETHI]

Sh. K. .Lakshmipati Rao Ji,

I) I am highly thankful to you. Your reply "forced" me to make all-out efforts again .

(2) I solely relied on CESTAT judgement of the year 2006.

(3) Latest is the better than earlier case law.. Moreover, the judgment of the Supreme Court is the law of the land.

AI Summary

Contractor's GST on Used Tipper Sale: Clarification on Profit Margin and Tariff Item 8704 23 90 A contractor inquired about the GST obligations on selling a used tipper bought for government work in FY 2015-16, originally without VAT ITC. The sale price was 17.56 lakhs, with a written down value of 11.70 lakhs. Responses discussed the applicable GST, referencing Notification No. 8/2018-CT R and various tariff classifications under Chapters 84 and 87. It was clarified that tippers are classified under Tariff Item 8704 23 90, as per a Supreme Court ruling, and GST should be considered on the profit margin. The discussion highlighted the importance of current legal precedents.