Old Ginning machinery purchase

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This query is : Resolved

Allauddin Patel (Querist)

19 September 2024 Dear sir, my question is we purchased old ginning machinery from unregistered person and issued urd purchase bill... After few days we sold this machinery in bill to registered tax payer on 18% gst.....
Is this correct? Kindly clarify

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

12 August 2025 Thanks for your question!
Here’s the clarification on your situation with old ginning machinery:

1. Purchase of Old Machinery from Unregistered Person
Since the supplier is unregistered, they cannot charge GST or issue a tax invoice.
You have done a URD (Unregistered Dealer) purchase bill which is okay as a documentary evidence of purchase.
2. Input Tax Credit (ITC) on Such Purchase
You cannot claim ITC on purchases from unregistered persons.
If the machinery was bought for business use and GST was paid on subsequent sale, no ITC on purchase side.
3. Sale of Machinery to Registered Dealer with GST @18%
When you sell old machinery to a registered person, you need to charge GST on the transaction value at the applicable rate (18% in your case).
Your invoice to registered buyer should have GST @18%.
4. Is This Correct?
Yes, it is correct to charge GST at 18% on sale of machinery to registered buyer.
The purchase from unregistered person does not impact your liability to charge GST on sale.
The sale is treated as supply under GST, so you must charge GST regardless of your purchase source.
5. Additional Points
Make sure to keep proper documentation of the sale invoice with GST details.
You are responsible for charging and depositing GST on the sale.
You cannot claim ITC on your purchase from unregistered supplier, but can pay GST on sale and claim ITC on other eligible inputs.

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