Example 28

While continuing with the above example as XY firm is also dealing in second hand goods. They have done minor processing on second hand machine like paint and minor repair on old machine and sold the second hand machine for consideration Rs. 4000 to customer. The question arises whether such supply of second hand goods is chargeable under GST and what is the value of supply.

Ans. Section 7 ,cope of supply provides for any supply in the course of business for consideration. Thus supply of second hand goods in the course or furtherance of business is covered under rule 32(5), Determination of value in respect of certain supplies (Chapter-IV of CGST Rules,2017) . The said rule provides the manner of determination of value of supply of second hand goods. It provides that where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e. used goods as such or after minor processing which does not change the nature of the goods and where no input tax credit has been availed on purchase of such goods, then the value of supply shall be the difference between the selling price and purchase price and where the value of such supply is negative it shall be ignored.

Thus, in the above example, value of supply for chargeability of GST is Selling Price minus purchase Price  i.e Rs 4000 - Rs 3000 = Rs. 1000 .