RCM on Used Rice Mill Machinery Purchased from (Closed) inoperative Rice Mills

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This discussion clarifies the Goods and Services Tax (GST) implications for businesses dealing in second-hand rice mill machinery. It addresses whether Reverse Charge Mechanism (RCM) applies when purchasing used machinery from unregistered dealers, especially from closed or inoperative mills. The consensus is that RCM is not applicable on the purchase itself, but GST is payable on the profit margin. Additionally, it confirms that e-way bills are required for transporting such second-hand machinery, regardless of whether the transaction is intra-state or inter-state.

Varaprasad Geddada

Varaprasad Geddada (Querist)

26 April 2023 Sir/Madam

My client deals in second hand rice mill machinery business. They purchase Used machines from bank auctions, inoperative rice mills and the same are sold to another rice mills with or without repairs. They purchase from all over India. They are registered as Regular GST Dealer.
My queries are
1. Do they need pay to pay RCM on purchase of machinery (inter state) from Unregistered Dealer?.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 April 2023 RCM not applicable but they have to pay GST on the profit they earn.

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CA SANDESH MAHIPAL

CA SANDESH MAHIPAL (Expert)

26 April 2023 Agree with Seetharaman Sir. Even you can advice your client to opt for Margin scheme for tax payment.
Regards
CA Sandesh Mahipal

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Varaprasad Geddada

Varaprasad Geddada (Querist)

27 April 2023 Thank you so much CA Seetharaman sir and CA Sandesh Mahipal sir.

Sir, Is ewaybill required for transport of such second hand machinery (on purchase) from URD place (Both intra and interstate cases).

CA SANDESH MAHIPAL

CA SANDESH MAHIPAL (Expert)

27 April 2023 Yes, e-way is required.

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