TaxTMI 
TaxTMI 
Taxability of capital goods (machine) when no ITC availed?
X X X X Extracts X X X X
X X X X Extracts X X X X
....axability of capital goods (machine) when no ITC availed?<br> Query (Issue) Started By: - Rajat Gupta Dated:- 10-12-2025 Last Reply Date:- 14-12-2025 Goods and Services Tax - GST<br>Got 10 Replies<br>GST<br>My client purchased a machine when he did not have any GST registration. Later on, after obtaining registration, he did not claim its ITC as well. Now he wants to sell the machine. Is he bound ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to charge tax on sale of machine or is there any exemption in this case? Reply By Sadanand Bulbule: The Reply: Your client has to charge GST on the sale price of the machine, as it is a supply by a registered person for a consideration. The fact that ITC was not claimed only means he does not have to worry about the ITC reversal calculation under Section 18(6), but he still has to pay the standa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd output GST on the actual sale price. Reply By KALLESHAMURTHY MURTHY K.N.: The Reply: Sir, I agree with the views of Sadanand Bulbule Sir. A registered person is required to collect and pay tax when effects the sale of taxable goods. Reply By Ryan Vaz: The Reply: Section 7, CGST Act, 2017 - Sale of business assets is a supply if made in the course or furtherance of business. Sc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hedule I, Para 1 - Supplies between related/distinct persons without consideration (not relevant here but confirms that assets of business are taxable when supplied). Section 22 & 24, CGST Act - Once registered, all taxable outward supplies must comply with GST levy. Section 18(6), CGST Act - Applies when ITC is availed; requires reversal or tax on transaction value, whichever is higher. If no I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....TC was availed, this section does not impose any special adjustment, but GST on outward supply still applies. Circular No. 44/18/2018-GST dated 02.05.2018 - ITC on goods held in stock/capital goods at the time of registration is optional and must be taken within the time limits of Section 18(1)(a). Short Practical Answer Yes - your client must charge GST on the sale of the machine once he is a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....registered person. There is no exemption merely because (i) the machine was purchased before registration, or (ii) ITC was never claimed. The transaction is a taxable supply of business assets by a registered person. However, Section 18(6) does not apply because ITC was never taken-so GST is charged only on the transaction value, without any special reversal calculation. Reply By KASTURI SETHI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....: The Reply: Dear Querist, Does your client want to sell machine as scrap or second hand capital goods (machinery) ? Pl. reply.. Section 18 (6) is meant for only a registered person who has availed ITC on capital goods or plant and machinery. In this scenario, ITC has not been taken. Hence not applicable. Proviso to Section 18 (6) also cannot be applied here as this proviso specifically pertai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns to sale of scrap of refractory bricks, moulds and dies, jigs and fixtures (NOT other capital goods or plant and machinery). Reply By KASTURI SETHI: The Reply: In continuation to my above reply :- Mention capital goods specifically. Reply By Rajat Gupta: The Reply: Sir it is for sale as second hand capital goods Reply By KASTURI SETHI: The Reply: Sh.Rajat Gupta Ji, Will you....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... please elaborate your query ? It is too short to reply correctly. So many factors are involved, especially, focussing on non-taking ITC. The case can tilt in favour of your client. Waiting for your response. To be continued. Reply By Shilpi Jain: The Reply: GST would be payable on the sale value if sold to an unrelated person. However, if disposed off without any consideration - no further li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ability as it does not fall under schedule I Reply By KASTURI SETHI: The Reply: Tax cannot be charged twice on the same goods. HSN would remain same for second hand goods (NOT scrapped). ITC has not been taken on the capital goods. The registered person is not engaged in the business of trading of second hand goods. Margin scheme not applicable. Schedule-1 not applicable at all. The CRUX is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... whether SUCH resale is covered in the definition and scope of supply or not ? So the decision cannot be arrived at without full facts of the case. Reply By Padmanathan KV: The Reply: GST is payable on the sale consideration.<br> Discussion Forum - Knowledge Sharing ....