Company A purchased a specialized
trading terminal for Rs 4 lakh + GST @18% on 1st August, 2017. The
company expected the system to last 8 years and will generate a residual value
of Rs. 20000.
However, due to rapid changes in
technology, the company was forced to abandon the system only after 2 years for
Rs. 1 lakh and invest in new infrastructure.
Whether the disposal of such
terminal is taxable under GST?
As per Section 7 of
CGST Act, supply of goods and/or services
covers any activity such as sale, transfer, barter, exchange, license,
rental, lease or disposal made or agreed to be
made for consideration
and for business.
per Schedule I, permanent transfer or disposal of business assets where input
tax credit has been availed on such assets even without consideration is covered
II also specifies that where goods forming part of the assets of a business are
transferred or disposed of by or under the directions of the person carrying on
the business so as no longer to form part of those assets, whether or not for a
consideration, such transfer or disposal is a supply of goods by the person.
in accordance with above provisions transfer of specialized trading terminal on
which ITC is claimed at the time of purchase is covered under the scope of
supply. Value of supply is determined according to section 15, if supplier and
buyer is not related and price is the sole consideration then
transaction value i.e. Rs. 1 lakh in this example is value for the
purpose of GST(assumed it is excluding tax)