The Central Board of Indirect taxes and customs(CBIC) has clarified the treatment for scrap sales by government departments. This includes supplies to the registered persons and UN-registered persons.
It clarifies who shall pay the GST under the below circumstances. Let us see in detail
1. GST treatment for the sale of scrap by government departments to Registered person
Whether the supply of the below goods by Government departments taxable under GST or not?
- used vehicles
- seized
- confiscated goods
- old and used goods
- waste and scrap
Clarification: It may be noted that intra-State and inter-State supply of used vehicles, seized and confiscated goods, old and used goods, waste, and scrap made by the Central Government, State Government, Union territory, or a local authority is a taxable supply under GST.
Vide notification No. 36/2017-Central Tax (Rate) and notification No. 37/2017-Integrated Tax (Rate) are both dated 13.10.2017. It has been notified that intra-State and inter-State supply respectively of used vehicles, seized and confiscated goods, old and used goods, waste, and scrap by the Central Government, State Government, Union territory, or a local authority to any registered person, would be subject to GST on reverse charge basis as per which tax is payable by the recipient of such supplies.
2. GST treatment for the sale of scrap by government departments to un-registered person
Whether intra-State and inter-State supply of used vehicles, seized and confiscated goods, old and used goods, waste and scrap made by the Central Government, State Government, Union territory, or a local authority to an unregistered person is taxable under GST or not?
Clarification: It was noted that such supply to an unregistered person is also a taxable supply under GST but is not covered under notification No. 36/2017-Central Tax (Rate) and notification No. 37/2017-Integrated Tax (Rate) both dated 13.10.2017.
5. In this regard, it is clarified that the respective Government departments (i.e. Central Government, State Government, Union territory, or local authority) shall be liable to get registered and pay GST on intra-State and inter-State supply of used vehicles, seized and confiscated goods, old and used goods, waste and scrap made by them to an unregistered person subject to the provisions of sections 22 and 24 of the CGST Act.
Circular Ref. 76/2018 dt.31.12.2018
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