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Sale of R & D Machinery Purchased without excise duty (DSIR)

11 October 2018

Sirs,

We have purchased the machinery without Excise duty for R & D purpose on July 2014, now completed 4 years only, ( no transfer or sale within 5 years as per ce.notification no.3/2007).

Now the same machine we have to sale.

What is the implications in GST.
please guide me in this regards.

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8 Replies

Sundararajan S (Final Student of ICAI) (1764 Points)
Replied 11 October 2018

No tax arises. Tax on such sale arises only when input tax credit on such asset has been availed - w.r.t Schedule 1 of CGST Act, 2017

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 12 October 2018

As per schedule II : clause 4:. Transfer of business assets
[a] where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person

So its a supply & GST attracts .

Sundararajan S (Final Student of ICAI) (1764 Points)
Replied 12 October 2018

Schedule 2 just says whether a particular supply is a supply of goods or service. Taxability is not said in Schedule 2. Only schedule 1 says about supply without consideration.

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 12 October 2018

Agree, schedule 2 says that it is a supply but..... schedule 1 refer the input tax credit is of gst resign not of pre - gst ( as per definition of input tax credit in section 2(68) ). morever schedule 1 is in regard to activities treated as a supply even it is without consideration. so to make sure if the benefit of itc (gst regime) claimed by tax payer on capital goods couldn't be disposed off without levy of gst.

As in this regard we can refer the notification 8/2018 even though it is on a vehicle (but it is a capital good) the vehicle purchased in vat regime being sold in gst regime the gst is applicable on the transaction value.
now let's take example of goods purchased in vat resign (cst purchase) but returned back in gst regime the gst is applicable.

So the Input Tax Credit Refer in schedule I IN clause 1 , is of GST Regime not talks about pre-gst regime , Hence Any capital goods of pre gst regime sold is taxable under GST

Narayanan S (96 Points)
Replied 12 October 2018

Dear sirs

We have purchased as per Noti.no.16/2007 - CE. dt.01/03/2007 for use of Research & Development purpose. The approved by DSIR. (Department of Scientific and Research Technology).
Contion of notification "Shall not be transferred or sold for period of Five years from the date of installation" Now we have to sale within 5 years (4 years completed).
in GST what is rules and procedures for sale of the machinery.

We need clarification please.