Used lead acid batteries qualify as 'second hand goods' under CGST Rules, enabling Margin Scheme use for inter-state supplies.

The ruling determined that the used lead acid batteries qualify as 'second hand goods', allowing the applicant to operate under the Margin Scheme for these batteries. No advance ruling was provided on the classification of tax on outward supply in GSTR-3B. The Margin Scheme under Rule 32(5) of the CGST Rules applies to both intra-state and inter-state supplies, permitting the applicant to make inter-state supplies of used lead acid batteries under the Margin Scheme.

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Issues Involved:
1. Qualification of used lead acid batteries as 'second hand goods' under the Margin Scheme.
2. Classification of tax on outward supply under the Margin Scheme in GSTR-3B.
3. Applicability of Margin Scheme for inter-state supplies of used lead acid batteries.

Issue-wise Detailed Analysis:

I. Qualification of Used Lead Acid Batteries as 'Second Hand Goods':
The applicant, engaged in selling used lead acid batteries, sought determination on whether these batteries qualify as 'second hand goods' under Rule 32(5) of the CGST Rules, 2017. The Margin Scheme allows tax on the margin between the selling and purchase price of second hand goods, avoiding double taxation. Rule 32(5) specifies that this applies to used goods which undergo minor processing not altering their nature, and on which no Input Tax Credit is availed. The applicant purchases used lead acid batteries from unregistered suppliers and sells them without processing, qualifying them as 'second hand goods' under Rule 32(5). Thus, the applicant is entitled to operate under the Margin Scheme for these batteries.

II. Classification of Tax on Outward Supply in GSTR-3B:
The applicant queried the classification of tax on outward supply under the Margin Scheme in GSTR-3B. However, the Advance Ruling Authority noted that the query does not fall under the subjects specified in Section 97(2) of the CGST/RGST Act, 2017, which includes classification of goods/services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, registration requirement, and whether an activity constitutes a supply. Consequently, no advance ruling was provided on this aspect.

III. Applicability of Margin Scheme for Inter-State Supplies:
The applicant also sought to determine if the Margin Scheme under Rule 32(5) of the CGST Rules, 2017 applies to inter-state supplies of used lead acid batteries. Section 20 of the IGST Act states that provisions of the CGST Act apply mutatis mutandis to the IGST Act, including those related to the time and value of supply. Therefore, Rule 32(5) of the CGST Rules, which provides for the Margin Scheme in intra-state supplies, is also applicable to inter-state supplies. The applicant is thus entitled to make inter-state supplies of used lead acid batteries under the Margin Scheme.

Ruling:
1. The used lead acid batteries qualify as 'second hand goods'. The applicant can operate under the Margin Scheme for these batteries.
2. No advance ruling is given on the classification of tax on outward supply in GSTR-3B as the query is not specified in Section 97(2) of the CGST/RGST Act, 2017.
3. The Margin Scheme under Rule 32(5) of the CGST Rules, 2017 applies to both intra-state and inter-state supplies. The applicant is entitled to make inter-state supplies of used lead acid batteries under the Margin Scheme.

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