ITC reversal for Second hand plant and machinery purchased, Goods and Services Tax - GST

[Ramanathan Seshan]

Dear Experts,

Hope this message finds you well.

I am seeking clarification regarding the application of 18(6) in the context of a transaction between Company A and Company B. Here’s the scenario:

Company A purchases machinery from Company B and which had been used by Company B for three years. At the time of sale, Company B reversed the Input Tax Credit (ITC) since it had availed it during the time of purchasing the machinery.

After Company A purchased the machinery, it availed and utilized the ITC.

Subsequently sold the asset after two years at a 5% margin on the book value as of the date of sale.

With reference to the above, I would like to understand the following:

a) Would the 18(6) reversal be applicable in this case?

Best Regards,

S Ram