Sales tax on resale of car

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paviter singh (Querist)

28 December 2011 My client is a dealor of chemical and he was purchases a car in 2007 and he was paid vat @12.5% and not taken any input credit.

He has sold his car in 2009 and not charges any vat from party

Sales Tax authority say he will liable for paid Vat on sales of used car
it is clear cut double taxation.

Is he liable or not ?

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)

28 December 2011 Where is the Sales Tax Department wrong in not demanding the sales tax. Sales tax needs to be paid.

The client has the following options:
1) Ask the party (who purchased car in 2009) to pay VAT and remit them to VAT authorities.

The VAT amount paid on purchases of Car cannot be claimed as credit now, as the VAT amount must have been capitalised at the time of purchases. (So in a way the benefit for that has already been taken, as client must have claimed the vat amt in the form of expense/depreciation)

2) Alternatively bear the amount of VAT and pay it to the State Authorities.

paviter singh

paviter singh (Querist)

29 December 2011 thanks sumit..

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