QUESTION

In case of a restaurant ITC has not been taken on purchase of Capital goods. Now the restaurant is being closed and all the Capital goods are being sold. Whether GST is payable on sale of such capital goods. What are the relevant GST provisions in this case ?

ANSWER

Facts of the case: In case of a restaurant ITC has not been taken on purchase of Capital goods. Now the restaurant is being closed and all the Capital goods are being sold. Whether GST is payable on sale of such capital goods. What are the relevant GST provisions in this case ?

Law Applicable: Section 7 of CGST Act, 2017
Section 7: Scope of supply
(1) For the purposes of this Act, the expression '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;
………………….
…………………
…………………
CGST RULE 44: Provided that where the amount so determined is more than the tax determined on the transaction value of the capital goods, the amount determined shall form part of the output tax liability and the same shall be furnished in FORM GSTR-1.

Reply: Every supply under GST is taxable if it is not exempted by virtue of any notification. The capital goods purchased is taxable item. As per section 9 read with section 7, the taxability of supply is not affected by the fact that whether ITC is taken or not. Therefore, the capital goods supplied after closure of restaurant will attract GST.

Tax Planning: To reduce the tax liability you may go for composition scheme if you are eligible for the same. (Reply dt. 27/07/2021)