vat on second hand comercial vehical
This query is : Resolved
03 September 2011
my firm is a fleet owner(transporter),and we sale a trailor(truck) to an individual is there any obligation of ours to collect vat from purchaser, as purchaser is not willing to pay it to us, we also want to avoide vat, please suggest me ,
03 September 2011
Since you, the seller, is a registered dealer with the Deptt., you are authorised/required to issue VAT invoice, its' immaterial whether the purchaser is a registered dealer or not, however something more practical can be focussed if full/exact details are forwarded of your query.
03 September 2011
sir we want to avoide any vat obligation as purchaser is not willing to pay vat to us,so suggest me how to draft sell deed, please suggest me, we are not dealing in sale or purchase of truck,we registered with department as a coal trader
05 September 2011
First of all we should be clear that VAT is applicable as Value Added Tax phenomenon, in a case where there is a subsequent value addition on sale/ re-sale it becomes applicable and in order to avoid cascading taxation effect.
Further Capital Gains will also arise as and when such a situation comes in to play there as per provisions of the Income Tax Act.
At the time of purchase of new commercial vehicle-trailor/truck VAT as applicable has already been paid on full value and you are not dealing with in the business of sale and purchase of second hand vehicles hence value on re-sale, it (the re-sale value) must not exceed the value paid on purchase of new vehicle-supposing that it would have not been in your case, otherwise-value addition. VAT rate is to be applied as per rate applicable for that particular state VAT legislation. Since VAT legislation does not prescribe depreciation, etc. rate I am of the aforesaid view that value of re-sale not to exceed original value to have VAT exemption in this particular case subject to the specific provision, if any as may be applicable in your case of STATE VAT provisions.
Further the purchaser is also not registered hence he will not be able to claim back the VAT, if charged, more so per provisions of setting off as applicable in his case.
Now the CG arises subject to the period of property held by you and accordingly it has to be dealt with whether LTCG or STCG, as the case may be.
However, above is purely an opinion base not supported by case-law, if any hence disclaimer prevails.
You are free to seek further opinion in this matter, query is therefore, assigned with OPEN status.
Further Capital Gains will also arise as and when such a situation comes in to play there as per provisions of the Income Tax Act.
At the time of purchase of new commercial vehicle-trailor/truck VAT as applicable has already been paid on full value and you are not dealing with in the business of sale and purchase of second hand vehicles hence value on re-sale, it (the re-sale value) must not exceed the value paid on purchase of new vehicle-supposing that it would have not been in your case, otherwise-value addition. VAT rate is to be applied as per rate applicable for that particular state VAT legislation. Since VAT legislation does not prescribe depreciation, etc. rate I am of the aforesaid view that value of re-sale not to exceed original value to have VAT exemption in this particular case subject to the specific provision, if any as may be applicable in your case of STATE VAT provisions.
Further the purchaser is also not registered hence he will not be able to claim back the VAT, if charged, more so per provisions of setting off as applicable in his case.
Now the CG arises subject to the period of property held by you and accordingly it has to be dealt with whether LTCG or STCG, as the case may be.
However, above is purely an opinion base not supported by case-law, if any hence disclaimer prevails.
You are free to seek further opinion in this matter, query is therefore, assigned with OPEN status.
05 September 2011
VAT is charged on the value addition to the goods and in case of sale of second hand sale of Fixed asset than if consideration is higher than WDV than capital gain tax will raise.
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