Implication of GST & Income tax on purchase of a second hand machine, Goods and Services Tax - GST

[Kishore Padav]

Our Company had sold an equipment to a customer (A) in May 2017 @ ₹ 20 lakhs (incl. CST). The customer (A) has paid us only ₹ 7 lakhs till date.He has expressed his inability to pay the balance ₹ 13 Lakhs and has asked the company to take back his machine or help him sell his machine. Now we have found a customer (B) who has agreed to purchase the machine @Rs.13 Lakhs from him. Since the company has to recover ₹ 13 lakhs from csutomer (A), it is insisting on getting the payment to be made directly to them by customer (B).

So in this deal, I have some queries

1 > Is GST applicable in this deal as Customer (A) is reselling the machine at a loss to Customer (B) ?

2 > Can company take payment from Customer (B) directly in its name.?

3 > Can customer (A) give an invoice to cutomer (B)?

4 > What are the income tax implications on Customer (B) ?

5 > Can he show machine purchased from Customer (A) in his ITR? and what are the documents required from Customer (A) to transfer the ownership of the machine to Customer (B)

6 > Can customer (B) claim depreciation on the machine in future?

Posts / Replies

[YAGAY and SUN]

In our view the Customer A is under statutory liability to pay the GST while selling to Machine to B. In GST book adjustment and recovery from third party is allowed.