The Gujarat Authority of Advance Ruling (AAR) consisting of Arun Richard and Atul Mehta has ruled that 18% GST is payable on the sale of a car by a company after using it for business purposes.
The applicant, M/s. Dishman Carbogen Amcis Limited, purchased a new car for Rs. 80 lakhs on 16-02-2018 for use in its business. The applicant did not avail GST Input Tax Credit at the time of purchase as it is restricted under Section 17(5) of the CGST Act, 2017. Depreciation was claimed under the Income Tax Act, 1961.
The applicant submitted that it intends to sell the used car for a consideration of Rs. 55 lakhs. The applicant intends to sell the car and charge GST in terms of Notification 8/2018 CT (R) dated 25-01-2018.
The applicant sought an advance ruling in respect of the rate of GST applicable on the new car purchased by the company that is sold after using it for business purposes.
The AAR found that the used car falls under the category of Serial Number 3 to Notification 8/2018-CT (R) dated 25-1-18.
As per the Serial Number 3 to Notification 8/2018-CT (R) dated 25-1-18, 18% GST is payable on old and used motor vehicles of an engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs), including utility vehicles.