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
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.
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.
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).