The Gujarat bench of the Authority for Advance ruling (AAR) has held that the sale of used cars attract 18% GST. State Member Mr. Atul Mehta and Central Member Mr. Arun Richard has further held that the value must the difference between the sale consideration and the depreciated value under the Income Tax Act, 1961.
The applicant, M/s. Dishman Carbogen Amcis Limited submitted that it purchased a new car [SUV of Specifications, Length > 4000 mm, and Ground Clearance > 170 mm] for Rs. 80 Lakhs on 16-02-2018 for use in its business and did not avail GST Input Tax Credit at the time of purchase as it is restricted under Section 17(5) of the CGST Act, 2017. Depreciation was claimed under the Income Tax Act, 1961 (43 of 1961).
The applicant has submitted that it intends to sell the same used car for a consideration of Rs. 55 Lakhs (Inclusive of all applicable taxes). The Written Down Value as per books of accounts is Rs. 47 Lakhs at the time of selling.
After verifying the submissions from both sides, the bench ruled that the subject car has engine capacity exceeding 1500 cc, length > 4000 mm, and ground clearance > 170 mm, with diesel as its fuel.
“As the applicant submits that it has not availed ITC, We find this used car to fall under the category of sr no 3 to Notification 8/2018-CT (R) dated 25-1-18,” the bench said.
“As the applicant submits that it has not availed ITC, We find this used car to fall under the category of sr no 3 to Notification 8/2018-CT (R) dated 25-1-18,” the bench said.
“The Value for intended supply shall be the difference between the consideration received for supply of said car and the depreciated value of the said car on the date of supply. Depreciation is as per Section 32 Income Tax Act,” it added.
“GST rate leviable is 18% (9% CGST & 9% SGST). Valuation & GST rate of intended supply is as per Ruling at sr no 1 & 2. Valuation, as per Explanation (i) to said Notification 8/2018-CT(R), is exclusive of GST,” the bench ruled.
Comments