Example

XYZ Ltd. is selling Fixed Asset (Used Motor Vehicle) for Rs. 260000 on 15/2/2018. Written down value is Rs. 300000 and has not availed ITC. Whether XYZ Ltd. is liable to pay GST on sale? if yes then what will be the rate of GST?
What will be the situation if the selling price of car would be Rs. 350000?

Answer

As per section 7 of CGST Act 'supply' includes''
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
Also as per Schedule II Transfer of business assets

(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person

Therefore sale of car is taxable supply and XYZ Ltd. is liable to pay GST.

Notification No. 8/2018 -Central Tax (Rate) dt. 25.01.2018 provides concession on the rate of tax on old and used motor vehicles under HSN 8703 /87 on the condition that ITC shall not availed on such vehicles from 28% to 18%/12% and Vide Notification No. 1/2018-Compensation Cess (Rate) dt. 25th January, 2018 , compensation cess on all old and used motor vehicles shall be NIL w.e.f 25.01.2018
The rate(18% /12%) on sale of old car in your case depends upon car engine capacity, length of motor vehicles or diesel or petrol vehicle.

Further, according to Explanation (i) of Notification No. 8/2018 -Central Tax (Rate) dt. 25.01.2018 for calculating taxable value in case of a registered person who has claimed depreciation under section 32 of theIncome-TaxAct,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.

As in our example the margin of supply is [260000-300000=(40000)] negative. Therefore XYZ Ltd. is not liable to pay GST on such supply.
If the selling price is Rs 350000 then the taxable value of supply (margin) is [350000-300000=50000], XYZ Ltd. is required to pay GST on Rs 50000 @ 18%/12% as the case may be.