Dear Sir, My client is a finance company. It sells repossessed vehicles. Please let me know the HSN code in 6 digits for sale of vehicles repossessed having capacity less than 1200 CC in petrol engine or less than 1500 cc in diesel engine and rate of tax on the above.

Reply—As per proviso to Rule 32(5) the purchase value of goods Repossessed from a defaulting borrower, who is not registered, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by 5% points for every quarter or part thereof (20% p.a.), between the date of purchase and the date of disposal by the person making such repossession. 

For example — If taxpayer sell an old Tractor which is 3 years old (original cost was Rs 10 lakh) is now Repossessed and sold at a price of Rs 7 lakh, the GST treatment will be:

Selling price = Rs 7 lakh
Deemed purchase price as per proviso (10 – 20% depreciation for 3 years) = 4 Lakh
Taxable value = Rs 3 lakh

Refer notification no. 08/2018 dated 25.01.2018 for rate of tax. HSN code will be 870321.