236/30/2024-GST — Clarification regarding the scope of “as is / as is, where is basis” mentioned in the GST Circulars issued on the basis of recommendation of the GST Council in its meetings
Summary
The circular aims to clarify exactly what this phrase means, especially when businesses are selling goods or assets in their current condition and location.
Essentially, the CBIC wants to ensure everyone understands that "as is, where is" means the buyer accepts the goods or assets exactly as they are, in their current state and location. The seller isn't responsible for fixing them up or moving them. This clarification is particularly relevant for sectors like infrastructure, mining, and even the sale of used machinery, where assets are often sold in their existing condition at their existing location.
This circular affects businesses involved in selling assets or goods under "as is, where is" conditions. They need to understand that the GST implications (like valuation, applicability of tax rates, and availability of input tax credit) are determined based on the asset's condition at the time of sale, and the buyer’s responsibility to take it from the location it is in. This clarity helps avoid disputes about the scope of the sale and ensures consistent application of GST rules.
There are no specific deadlines mentioned in the circular itself. However, businesses should immediately review their past and future transactions involving "as is, where is" sales to ensure compliance with this clarified understanding. This helps prevent potential GST demands or penalties down the line.
Key Changes
| Change | Impact |
|---|---|
| Clarifies the scope of "as is / as is, where is basis" sales, stating it refers to the supply of goods (including capital goods) in their existing condition without further processing or repair by the supplier after their initial use. | Provides a definitive interpretation of the term, reducing ambiguity and potential disputes regarding GST applicability on such sales. |
| Confirms that the GST rate applicable to the original goods applies to their sale on "as is / as is, where is basis", irrespective of whether the buyer uses the goods for the same purpose or a different purpose. | Simplifies GST determination for these sales, as the original GST rate is consistently applied, regardless of the subsequent use by the purchaser. |
| States that GST is applicable on the sale of used goods or scrap, even if sold on "as is / as is, where is basis," and no concessional rate or exemption is available solely based on this principle. | Reinforces the general principle of GST applicability on the sale of goods, clarifying that the 'as is' condition doesn't automatically qualify for any special treatment. |
| Addresses situations where incidental services are provided along with the sale of goods on "as is / as is, where is basis," clarifying that GST implications of such bundled supplies will depend on whether they constitute composite or mixed supply, as per relevant GST provisions. | Provides guidance on handling situations where services are bundled with the sale of goods 'as is where is', ensuring proper tax treatment based on the nature of the supply (composite or mixed). |