Query of GST

Resale of the used JCB machine by a registered person would amount to supply under GST if made in the course or furtherance of business. JCB / earth-moving machinery generally falls under HSN 8429/8430 and attracts GST at 18%. Since the machine was originally purchased in 2015 for own use and not by a dealer in second-hand goods, the margin scheme under Rule 32(5) is generally not applicable. Accordingly, GST should ordinarily be charged on the full sale value.

Since the JCB machine was purchased in 2015 (Pre-GST era) and used for business purposes, its resale constitutes a "Supply" under Section 7 of the CGST Act, 2017. Here is the detailed breakdown of the tax liability:

1. GST Rate and Notification

For the sale of used vehicles and earth-moving machinery (like JCBs), the government issued Notification No. 8/2018-Central Tax (Rate).

• Applicable Rate: 18% (9% CGST + 9% SGST) as per entry no. 2 of the said notification (applicable to old and used heavy weaponry, armored vehicles, and similar machinery).

• HSN Code: 8429.

2. Valuation (Calculation of Taxable Value)

Since you mentioned the machine was purchased in 2015 and VAT was paid (meaning no GST Input Tax Credit was ever availed), the taxable value is determined as follows:

• Under Notification 8/2018-CT (Rate): The GST is not payable on the total sale value, but on the Margin.

• Calculation of Margin: * The margin is the difference between the Sale Consideration and the Depreciated Value (Written Down Value - WDV) as per the Income Tax Act, 1961, on the date of sale.

  • If the Margin is Positive: GST @ 18% is payable on the margin amount.

  • If the Margin is Negative: No GST is payable.

3. Key Conditions

• No ITC: This scheme is strictly applicable only if the taxpayer has not availed Input Tax Credit under the GST regime on this asset. Since it was a 2015 purchase, this condition is naturally satisfied.

• Invoice Detail: While issuing the tax invoice, you should mention that the tax is being paid under Notification No. 8/2018-Central Tax (Rate).

Conclusion:

The resale of the JCB is liable to GST at 18% on the margin (Sale Price minus Income Tax WDV). If the machine is being sold for less than its current book value (WDV), the GST liability will be Nill. - Setindiabiz