2026-VIL-84-AAR
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SGST Advance Ruling Authority

GST – Karnataka AAR – Applicability of Margin Scheme to purchase and sell of used cars – HELD - Motor vehicles, including second-hand cars, being movable property, squarely fall within the ambit of “goods” defined under Section 2(52) of the CGST Act, 2017. Therefore, the applicant is engaged in the business of dealing in second-hand goods – The Rule 32(5) of the CGST Rules, 2017 provides a special method of valuation for persons engaged in the business of buying and selling of second-hand goods, permitting payment of GST on the margin, being the difference between the selling price and the purchase price, subject to certain conditions. Further, Notification No. 8/2018-Central Tax (Rate), as amended, also provides for payment of GST on the value representing the difference between the selling price and the purchase price in respect of old and used motor vehicles, subject to the condition that no input tax credit has been availed on such vehicles. However, in the absence of necessary details and documentary evidence provided by the applicant regarding the nature and extent of repairs undertaken on the used cars, the Authority is unable to conclusively verify whether the applicant meets the prescribed conditions for availing the benefit of the said margin scheme – Ordered accordingly - Classification and Valuation - Applicable HSN code and rate of tax for the second-hand cars sold by the Applicant – HELD - Motor vehicles, including second-hand cars, are classifiable under Heading 8703 of the GST Tariff. The applicable rate of tax shall be as prescribed under the relevant rate notifications, read with Notification No. 8/2018-Central Tax (Rate), as amended. However, in the absence of particulars relating to engine capacity, vehicle length, and fuel type furnished by the applicant, the exact applicable rate of tax cannot be determined. Regarding valuation, the taxable value shall be the difference between the selling price and the purchase price of the second-hand motor vehicles, and where such difference is negative, the same shall be ignored.
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