XY Firm purchased old electronic goods while selling new electronic goods. Mr. A purchased fully automatic washing machine for Rs. 28000 from XY firm and also sold his old semi-automatic machine in exchange for Rs 3000 and paid balance consideration Rs 25000. XY firm also dealing in second hand goods. Determine the following in this illustration:-

(a)    Transaction value of supply by XY firm for the purpose of GST

(b)  Whether old machine given in exchange liable for GST under reverse charge to XY Firm in case Mr. A is an individual or A is a unregistered business entity.


(a) In the above example consideration for supply by XY firm is not wholly in money or price is not the sole consideration, thus valuation shall be done as per rule 27 (Chapter- IV of CGST Rules,2017)of determination of valuation Rules. According to this rule, value of supply when open market value is not available at that time is consideration in money plus monetary value of other than money consideration i.e 25000+3000 = 28000 for the purpose of charging. GST.                                                                                                                          

(b) Levy provisions under CGST/ SGST/ UGST /IGST Act  provide that where the supply made by a person not registered under Act to registered person, tax under GST shall be paid by the recipient under Reverse charge. But in the above illustration sale of old machine by household customer is not covered under scope of section 7 because, it is not provided for the purpose of furtherance of business. Thus, no reverse charge is applicable on such sale old machine, as such, there is no applicability of GST on the amount adjusted for old washing machine.

In case A is a unregistered business entity and had supplied old machine for furtherance of business then XY is liable to pay GST at applicable rate on exchange value of Rs. 3000 under reverse charge.


The provisions of section 9(4) i.e 'provisions of reverse charge where goods are supplied by unregistered person to a registered person' are not applicable till  31st day of March 2018 vide Notification No.8/2017-Central Tax(Rate).