Vat liability for a service company (who is not a dealer)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2012 Dear Sir,

We are a purely service company (having service tax number) and not involve in selling of goods and trading activities and NOT a dealer in whatsoever way.

We have recently changed offices and sold our old furniture.

1. Does this transaction of selling old furniture will attract VAT? If NOT, under which head we record the gain from old furniture so we are fully compliant.

If YES (i.e transaction will attract VAT), please see question 2.

2. We are service company and don't plan to do trading in any near future. Do we have to take TIN Number to deposit VAT or are there any provisions to deposit one of tax with the department (as selling old furniture is one of transaction for us and we won't be doing any trading of any sort in near future)

3. Can we immediately apply to cancel the TIN once we deposit the VAT? Given we will not to any trading and this is extra compliance we have to handle, hence the cancellation

4. How long the process of taking fresh TIN and cancelling is about?

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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10 January 2012 Mr Author,
If the value of such sales is less than Rs5 lakhs in a finncial year your company will not be liable to be registered and pay any VAT. If possible, if the amount realised exceeds Rs5 lakhs, try to split the sale into two fianacial years. If that is also not viable,then let me know, I will give another idea to avoid registration.
MJK

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2012 Dear Sir,

Thank you for your attention and reply. The value is in range of Rs.50 Lacs as its sale of fittings and fixtures on "as is where is" basis. We can't split the sale in two financial years.

Appreciate your alternate thoughts on way to avoid registration.

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MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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11 January 2012 Mr Author,
Fittings and fixtures are immovable property and they do not attract VAT on their sale.Sale of moveable furniture(tables chairs,sofas etc)only attracts VAT. If the person bying the old furniture uses them in the same premises there will be no problem. One must have proper sale documents while transprting the old furniture to elsewhere. On the way or at the checkposts one may be checked.
Alternately,you can engage a registered dealer to auction all the furniture,issue bills on your behalf,collect taxes and pay to the government.The reason for suggesting this idea is you may not be eligible to get a registration under VAT Act only for selling your furniture.Here by engaging an auctioneer(regd under VAT,you may receive the sales proceeds ,pay some agreed commission and finish with it...MJK

Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2012 Dear Sir,

Thank you for your reply. The fitting fixtures and furniture (movable as well as immovable property) is sold on "as in where is basis" and its not moved outside the premises by the buyer (i.e; buyer is using the existing fittings and fixtures in that premises only and has moved into the place we have vacated). We have given the buyer two invoices one of movable and other of immovable assets. The transaction is already completed. So to give you summary again:

1. Fitting and fixtures and furniture is sold on as in where basis.

2. The buyer has moved into the premises we vacated and is using the fitting fixture and furniture.

3. We have given the invoices as a) movable assets b) immovable assets

4. In all cases they haven't moved anything outside and using the office as we have vacated, so goods are not trasported to any place and used by the buyer in the same premises we vacated.

In view of above facts and your suggestions, do you think there is need for us to take VAT or we are OK for not taking VAT, given the goods are NOT transported and used by buyer as it is, on same premises. The transaction is already completed so we are just waiting for the VAT issue clarification.

Appreciate if you can give your views so we can close the issue. Thank you for your time and interest.

Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2012 Dear Sir,

Appreciate if you can give your final opinion based of below summary:

1. Fitting and fixtures and furniture is sold on as in where basis.

2. The buyer has moved into the premises we vacated and is using the fitting fixture and furniture.

3. We have given the invoices as a) movable assets b) immovable assets

4. In all cases they haven't moved anything outside and using the office as we have vacated, so goods are not trasported to any place and used by the buyer in the same premises we vacated.

In view of above facts and your suggestions, do you think there is need for us to take VAT or we are OK for not taking VAT, given the goods are NOT transported and used by buyer as it is, on same premises. The transaction is already completed so we are just waiting for the VAT issue clarification.

Appreciate if you can give your views so we can close the issue. Thank you for your time and interest.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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19 January 2012 Mr Author,
This problem arises when you are alraedy a dealer and if the VAT autorities notice the sale of such movable and immovable property from your final accounts. In your case such a situation does not arise. So better close this and matter and be happy.Wish you a very happy new year 2012

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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19 January 2012 Mr Author,
This problem arises when you are alraedy a dealer and if the VAT autorities notice the sale of such movable and immovable property from your final accounts. In your case such a situation does not arise. So better close this matter and be happy.Wish you a very happy new year 2012

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MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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19 January 2012 Mr Author,
This problem arises when you are alraedy a dealer and if the VAT autorities notice the sale of such movable and immovable property from your final accounts. In your case such a situation does not arise. So better close this matter and be happy.Wish you a very happy new year 2012.
MJK