ITC billing on sale of capital goods.

[Gourav Ravi Garg]

I purchased a capital goods (machine) to make exempted good and didn't avail ITC also. Now I wants to sell the machine in scrap. How should I show the billing of the machine? Do I have to pay the GST still?

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

GST will be applicable on the sale value. Issue no.118653 discusses this point.

[NYAYASETU LEGAL ASSOCIATES LLP]

Yes, you being a GST registered person has to pay GST on scrap sale of machine irrespective of the facts whether you avail ITC or not. GST is calculated on transaction value, no need to compare the tax on transaction value with remaining ITC since you did not avail ITC at all but it is confirmed that you have to pay GST on scrap sale.

[Raam Srinivasan Swaminathan Kalpathi]

Issue no.118653 of 2023

[KASTURI SETHI]

GST is payable on the sale of capital goods as scrap. It is covered under Section 7 (1) (a) of CGST Act.

Emphasis is laid on the term, " all forms of supply". Resale is also a sale.

[Shilpi Jain]

Sale of machine will attract GST liability since this is not dependent on availing/non-availing of credit at the time of purchase.

How many years has it been since you have purchased the machine? If s 16(4) time limit exists then you can avail eligible credit for the balance useful life of the asset.

If not, you will not be able to take credit.

[Pinnacle Tax Advisor]

Yes, The liability to pay GST will arise on the transaction value irrespective of ITC availed or Not

AI Summary

GST on sale of capital goods as scrap applies regardless of input tax credit availed earlier. Sale of capital goods, including a machine sold as scrap, attracts GST on the transaction value as a taxable supply regardless of whether input tax credit was availed at the time of purchase. The fact that the capital goods were originally used for exempted goods does not alter the taxability of the subsequent sale. Where the asset remains within the permissible credit period, eligible input tax credit may be available for the balance useful life.