GST on Sales of Fixed Assets As Scrap

[PRAVIN TALEGAONKAR]

Dear All,

Hi,

We purchased plant & machinery from company during May-2022 and availed ITC on same.

We are planning to sale that P&M as scrap after decontamination. Our customer and vendor are same for purchase of P&M and for decontamination services.

We have all the agreement for above transactions.

Detailed example for calculation is attached for your reference.

Following are my observation related to this transaction.

1. GST is payable on Sales value (refer calculation G) more than GST needs to be reversed (refer calculation N) I need to pay GST as per sales invoice.

2. If I calculate GST on Sales realisation refer 6-GST Payable on Net Realisation valuemy liability increases by Rs. 54.00

** Here is my question whether GST department ask for payment of additional GST liability on sales realisation. (please refer to 6)

1) Purchase of Fixed Assets
Particulars	Sr No.	Amount
Taxable Value-Assets Purchased in May-2022	A	1,000.00
ITC Availed on Assets Purchased	B	180.00
Total Invoice Value	C=A+B	1,180.00
Less:- Commercial Credit Note Issued	D	40.00
Addition to Fixed Assets	E	1,040.00
2) Sale of Fixed Assets-Scrap
Particulars	Sr No.	Amount
Taxable Value-Sale of Fixed Assets in July-2024	F	700.00
GST Payable on Sales of Fixed Assets	G	126.00
Total Invoice Value	H=F+G	826.00
3) Decontamination Charges
Particulars	Sr No.	Amount
Decontamination Charges	I	400.00
GST @ 18%	J	72.00
Total Invoice Value	K=I-J	472.00
4) Reversal of ITC on purchase of Fixed Assets
Particulars	Sr No.	Amount
ITC Availed at time of Fixed Assets Purchase in the month of May-2022	B	180.00
ITC Available on sale of Fixed Assets Sale of Capital Goods (5% Per Quarter)	J	72.00
GST Needs to be reversed	L=B-J	108.00
5) Comparation of GST payable
Particulars	Sr No.	Amount
GST Payable as per Sales Invoice Issued	G	126.00
ITC Reversable as per point 4	L	-108.00
Since GST paid on Sales invoice which is higher no need to pay Additional Amount	M=G+L	18.00
6) GST Payable on Net Realisation Value
Particulars	Sr No.	Amount
Taxable Sales Value	F	700.00
Decontamination Charges paid	I	400.00
Net Sales Realisation	N=F-I	300.00
GST on Net Realisation Value	O	54.00
7) Comparation of GST payable
Particulars	Sr No.	Amount
GST Payable on reversal of ITC availe at time Addition to Fixed Assets	L	108.00
GST on Net Realisation Value	O	54.00
Since GST paid on Sales invoice which is higher no need to pay Additional Amount	P=L-O	54.00

[KASTURI SETHI]

Go through para no. 13 (serial no. 7) of the decision of AAR Karnataka reported IN RE : DEPARTMENT OF PRINTING, STATIONERY AND PUBLICATIONS - 2020 (3) TMI 1088 - AUTHORITY FOR ADVANCE RULING, KARNATAKA

[Shilpi Jain]

Putting in such detailed query and expecting an answer is not reasonable. Pls understand that the experts also have a restriction of time that they can give here. 

You should put your query and principally get a view rather than putting such elaborate examples. THis will also ensure that there is no inappropriate advice considering the overwhelming amount of information which may not be read / understood completely.

Suggest you approach a professional in this regard who can spend time and provide appropriate advice.

[KASTURI SETHI]

I agree with Madam Shilpi Jain in toto.

A query must be specific and to the point. 

Brevity is beauty.

AI Summary

GST on sale of fixed assets: compare GST on invoice with ITC reversal to determine additional liability. Where plant and machinery on which ITC was availed is sold as scrap after decontamination, GST consequences include GST charged on the sale invoice and a required reversal of ITC; if GST invoiced on the sale exceeds the ITC reversal amount, the illustrative calculation shows no additional GST payment is necessary when compared to GST computed on net realisation. The taxpayer queried whether authorities could require GST based on net realisation; a respondent cited an Advance Ruling paragraph for guidance and commenters recommended concise, professional advice.