Case Details: Ponnusamy Thangaraj, In re - [2026] 183 taxmann.com 704 (AAR-TAMILNADU)
Judiciary and Counsel Details
- C. Thiyagarajan & B. Suseel Kumar, Member
Facts of the Case
The applicant, a proprietary concern, had purchased a new car in April 2025 for the personal use of its proprietor and capitalised the vehicle in the business accounts. No input tax credit (ITC) was claimed on the purchase of the car and depreciation was also not claimed for the financial year 2025-26. The applicant later decided to sell the vehicle as a used car and sought an advance ruling on whether GST was payable on the full sale value or only on the profit/margin in terms of Notification No. 08/2018-Central Tax (Rate) dated 25-01-2018 relating to valuation of old and used vehicles.
AAR Held
The Authority for Advance Ruling held that the margin scheme under Rule 32 of the CGST Rules read with Notification No. 08/2018-CT (Rate) applies only to persons engaged in the business of buying and selling second-hand goods in the normal course of business. Since the applicant was not dealing in second-hand goods and the vehicle had originally been purchased as a new car for the personal use of the proprietor, the margin-based valuation method was not available. Accordingly, the value of supply had to be determined under Section 15(1) of the CGST Act on the basis of transaction value, and GST was payable on the full sale consideration received for the car. The ruling was therefore in favour of the Revenue.
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