Applicant in business of selling second-hand goods, opting margin scheme cannot claim ITC on indirect expenses
The MAHARASHTRA AUTHORITY FOR ADVANCE RULING, in a matter of DECCAN WHEELS, ruled out that “The applicant who is in the business of selling second-hand goods, who has opted for margin scheme cannot claim Input Tax Credit [ITC] on indirect expenses like rent, commission, etc., ruled Advance Ruling Authority.”
The Order was issued by Mr. Rajiv Magoo and Mr. T.R. Ramnani.
“For the purposes of Notification No. 8/2018 -Central Tax (Rate) New Delhi, the 25th Januarv, 2018, – (i) in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act,1961 (43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply, and where the margin of such supply is negative, it shall be ignored; and (ii) in any other case, the value that represents the margin of supplier shall be, the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored. 2. This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods.”
The Authority said that, the concessional rate under the notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017. Here, since the applicant has been availing the benefit of the said notification and paying GST at a concessional rate, they shall not avail Input Tax Credit.
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