7.
In my opinion permanent transfer or disposal of business assets is something that has to be factually arrived at. Just because company law requires a write off in a number of years it does not mean that the asset has ceased to exist or disposed off. Schedule 1 merely creates a legal fiction of supply even if there is no consideration in case of permanent transfer as well as disposal. Permanent transfer requires two parties where as Disposal does not need two parties. One cannot tax something that is still existing and working in the business just on the basis of disclosures in the financial statements. Moreover disposal would mean something that has been discarded as having no value. Disposal cannot be assumed in the case of a business asset that is still existing in the business.
If it is written off because it has ceased to work due to complete breakdown, then reversal will be required. A treatment under another law ipso facto cannot result in a different tax treatment in GST.
Rule 40 (2) The amount of credit in the case of supply of capital goods or plant and machinery, for the purposes of sub-section (6) of section 18, shall be calculated by reducing the input tax on the said goods at the rate of five percentage points for every quarter or part thereof from the date of the issue of the invoice for such goods.
Sec 18(6) talks about supply of capital goods or plant and machinery on which input tax credit has been taken.
Schedule 1 clause 1 can deem permanent transfer or disposal as a supply where input tax credit is availed even if there is no consideration.