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Doubt regarding the applicability of transaction

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R.Sankaranarayanan

Indirect Tax Executive

125 Points Posted on 04 January 2011

Hi All,

Very good morning.

We are in the process of selling our entire Old Plant & Machinery of Unit II on “as is where is basis”. In this regard we would like to know the applicability of TCS & VAT Rate at which it should be disposed off. Besides we also want to know the tax implications in the following cases :

a) Sale is made to dealer within State to be used by him as Capital Goods : VAT Rate to be applied .

b) Sale is made to dealer within State to be used by him as Scrap Goods : VAT Rate to be applied .

c) Sale is made to dealer Outside State : CST Rate to be applied.

d) Excise Duty Applicability : We have separate Excise Registration Number for this Unit II.

The life of the Plant is more than 10 years in our opinion there would not be any Excise Duty Liability.

Kindly give your opinion in this regard.

Replies (1)

U S Sharma

glidor@gmail.com

21670 Points Posted on 05 January 2011

1st of all the transaction value is to be addopted in fair manners, usually the invoice value is considered as transaction value, but if the unit is disposed off by inviting tenders/ bidding, then keep the entire record for further references.

a) there is no such item as capital goods, but machines / tools etc, go for list of local vat applicable

b) in case of central sales, 2% CST applicable against form C ( regd dealer) or full rate of local vat.

c) in case of scrap sales, refer local vat rules as it does not reflect the nature of capital goods. TCS applicable if the goods cleared as scrap.

d) if the capital goods have been subject to input credit then only u have to pay excise duty on WDV value, otherwise it does not attract excise.