GST on Second Hand Heavy Construction Equipment

 Normally, GST is charged on the transaction value of the products. However, In respect of 2^nd hand product, a person has to pay tax on the margin of the products. i.e The comparison between at which that products are the sales and that price at which the products are purchased. If that product has to no margin, no GST tax for such supply, the scheme is to avoid double taxation.

Valuation of 2ndHand Products:

According, to the rule 32(5) of the CGST rules, at 2017. Whenever any person dealing the products it sells and purchases of the 2^nd hand products. i.e, 2^nd hand products such has minor processing, they have no change products and no input tax availed on the purchasing products. The main comparisons between has to sell price and purchase price value are negative than it shall to be ignored.

The proviso to the above decide additionally provides that purchase value of the goods repossessed from an unregistered defaulting borrower, with the end purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by five percentage points for every quarter, between them the date of purchase and the date of transfer by the individual making such repossession.

In such manner, Notification No.10/2017-Central Tax (Rate) New Delhi, dated 28th June, at 2017 exempts intra-State supplies of 2ndhand products received by a registered person, they dealing in purchasing and selling of 2ndhand products and who have pays the central tax on the value of outward supply of such 2ndhand products as determined the under sub-rule of rule 32(5) of the CGST Rules, 2017, from an unregistered supplier. As Similar exceptions are respective SGST Acts.

Example: If any a company M/S XYZ, which deal in buying and selling of second-hand Equipment, purchase an old Equipment Hyundai 220 LC make 2014 (Original value 58.80 Lakh INR) for 32.00 Lakh INR from the unregistered person and sells the same after minor furbishing in May 2018 for 33.50 lakh INR. The supply of the equipment to the company for Rs. 32.00 lakh exempted and the supply of the same by the company to its customer for 33.50 lakh INR shall be taxed and GST shall be levied.  The value for GST purpose shall be Rs. 1.5 Lakh INR the difference between the selling & the buying price of the company.

In case any other value is added by way of repair, refurbishing, reconditioning etc. the same shall also be added to the value of goods and be part of the margin.

If margin scheme has opted for a transaction of second-hand goods, the person selling the equipment to the company shall not issue any taxable invoice and the company purchasing the equipment shall not claim any ITC.