TaxTMI 
TaxTMI 
2019 (6) TMI 822
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....o make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 02 FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH THE ADVANCE RULING IS SOUGHT 1. This Application is being filed by Safset Agencies Private Limited (Astaguru.com) ("Applicant"). 2. Applicant, having Good and Service Tax ("GST") Registration No. 27AABCS9352H124. 3. Applicant is an auctioneer dealing in various goods such as paintings, vintage collectibles, sculptures, classic miniatures paintings, fine writing instruments, vintage timepieces, celebrity memorabilia, aristocratic jewellery and vintage cars (hereinafter referred to as "goods"). 4. Applicant usually procures the above-mentioned goods on approva....
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.... (viii) The ownership of the goods is transferred after the sale invoice is issued to buyer by the Applicant. 6. The Applicant mainly deals in following: • Paintings procured from individual art collectors, artists or other art dealers. • Old jewellery, cars, watches, etc. including vintage cars. • Memorabila/CoIIectibles such as clothing, sport equipment, spectacles, accessories, autographs of celebrities and renowned personalities. • Antiques consisting mainly of antique books, jewellery, watches and other articles. 7. The different practices prevailing in the trade as to classification, valuation and applicable GST rates on above referred goods are summarized as under: Particulars Alternative 1 Alternative 2 Paintings: Bought from artist 12% on sale value (HSN Code: 9701 12% on sale value (HSN Code: 9701) Bought from other art dealers 12% on sale value HSN Code: 9701) 12% on sale value (HSN Code: 9701) Bought from individual art collectors 12% on sale value HSN Code: 9701) 12% on difference between sale price and purchase second hand goods as provided under Rule 32 (5) Cars:....
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.... New books 0% on sale value (HSN Code: 4901) 0% on sale value (HSN Code: 4901) Old books 0% on sale value (HSN Code: 4901) 0% on sale value (HSN Code: 4901) Collectibles 18% on sale value (HSN Code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule l, II, IV, V or Vi) 18% on difference between sale price and purchase price considering watches as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule I, II, IV, V or VI) Antique Books 12% on sale value (HSN Code: 9706) or on different between sale price and purchase price considering books as second hand goods as provided under Rule 32(5) of CGST Rule. (HSN Code: 9706) 0% on sale value (HSN Code:4901) Collectibles/Memorabilia: Articles such as clothing, sporting equipments, books, autographs, photographs and such other items Applicable rate of said items Residuary Rate (18%) by treating collectibles and memorabilia as separate class of goods (HSN Code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified ....
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.... goods as provided under Rule 32(5) of CGST Rules. (HSN code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule I, II, IV, V or VI) Antique Watches of an age exceeding one hundred years 12% on sale value (HSN Code: 9706) or 12% on difference between sale price and purchase price considering watches as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN Code: 9706) 18% on sale value considering watches as normal watches. (HSN Code: 9101/9102) or on difference sale price and purchase price considering watches as second hand second hand goods as provided under Rule under Rule 32(5) of CGST Rules. (HSN Code: 9101/9102) Books: Collectibles 18% on sale value (HSN Code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule l, II, IV, V or VI) 18% on difference between sale price and purchase price considering watches as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule I, II, IV, V or VI) Antique Books 12% on sale value (HSN Code: 9706) or on different ....
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....s" as defined under Rule 32(5) of CGST Rules. Hence, same should be valued at difference between the sale price and the purchase price. GST should be charged at applicable rate on such difference only and not on sale value/transaction value of such goods. PRAYER Applicant fervently prays to your Honor to pronounce advance ruling on the following questions after granting us opportunity of being heard: 1.1. Whether Applicant is dealing in second hand goods and tax is to be paid on the difference between selling price and purchase price as stipulated in Rule 32 (5) of CGST Rules, 2017? 1.2. The classification and HSN code of goods listed in table given in "Issues for Determination" and GST rates applicable to such goods. Further Submissions before Hon'ble Advance Ruling Authority (GST Maharashtra) Facts and Background: 1. Applicant has filed an application for advance ruling on 16.10.2018 along with statement of facts, issues for determination and the submissions. 2. Pursuant to personal hearing on 14.1 1.2018, Hon'ble Advance Ruling Authority hereinafter referred as to as "ARA") has accepted Applicant's application for further processing and final hearing. ....
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.... Alternative 1 Alternative 2 Paintings: Jewellery: Antique Jewellery of an age exceeding one hundred years 12% on sale value (HSN Code: 9706) 3% on sale value (HSN Code: 7113) Watches: New Watches 18% on sale value (HSN Code: 9101/9102) 18% on sale value (HSN Code: 9101/9102) Antique Watches of an age exceeding one hundred years 12% on sale value (HSN Code: 9706) 18% on sale value considering watches as normal watches. (HSN Code: 9101/9102) Books: Antique Books of an age exceeding one hundred years 12% on sale value (HSN Code: 9706) 0% on sale value (HSN Code:4901) Other Antiques: Other than jewellery, watches and books such as idols, sculptures, paintings, furniture, etc., of an age exceeding one hundred ears 12% on sale value (HSN Code: 9706) Applicable rate of said items (HSN of said items) Collectibles/Memorabilia: Articles such as clothing, sporting equipments, books, autographs, photographs and such other items Applicable rate of said items (HSN on said items) Residuary Rate (18%) by treating collectibles and memorabilia as separate class of goods (HSN Code: Residuary Entry - Serial No. 453 of Sched....
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.... The same should not be classified under residuary entry as there are specific entries in the rate notification for the said goods. 3. Further submissions as to applicability of Rule 32(5) of CGST Rules read with Section 15(5) of CGST Act: a. Section 15 of CGST Act prescribes value of taxable supply. Section 15(5) of CGST Act reads as follows: "Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations Of the Council shall be determined in such manner as may be prescribed" The government has notified Rule 32 of CGST Rules prescribing the manner of determination of value in respect of specified goods and services. b. Rule 32(5) of CGST Rules provides that where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e. used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negati....
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....cant humbly submits that it is settled jurisprudence principle that when the words of a statue are clear, plain or unambiguous i.e. they are reasonable susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of consequences. Moreover, if the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. This rule of interpretation is followed in plethora of judgments. The few such judgments are as under: i. Nelson Motis v/s Union of India (AIR 1992 SC 1981) = 1992 (9) TMI 355 - SUPREME COURT ii. Gurudevantt VKSSS Maryadit v/s State of Maharashtra (AIR 2001 SC 1980) = 2001 (3) TMI 976 - SUPREME COURT iii. Swedish Match AB v/s Securities and Exchange Board of India (AIR 2004 SC 4219) = 2004 (8) TMI 389 - SUPREME COURT iv. Government of Andhra Pradesh v/s Road Rollers Owners Welfare association [2004 (6) SCC 210] = 2004 (4) TMI 602 - SUPREME COURT In light of above submissions, Applicant humbly submits that valuation of supply of old cars, old watches, old jewellery, old books, paintings, antiques and memorabil....
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....d memorabilia, etc. Applicant, being an auction dealer, mainly sells "personal effects" which are used by the original owners or persons selling such goods to Applicant. Most Of above goods sold by the Applicant is by very nature old and used items. Rule 32(5) applies to second hand goods or used goods. The goods sold by applicant is old or second hand goods within the normal parlance or dictionary meaning, as stated in submissions filed in the course of personal hearing. Applicant strongly contends that in absence of statutory definition, the meaning of the term "second hand goods" or "used goods" should be taken as per dictionary meaning or common parlance and Rule 32(5) should be construed accordingly. Applicant humbly submits that it is well-settled jurisprudence principle that when the words of a statue are clear, plain or unambiguous i.e. they are reasonable susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of consequences. Moreover, if the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. This principle....
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.... credit has been availed on the purchase of such goods" shall apply. The purpose of this phrase seems to prevent the dealer purchasing second hand goods or used goods from registered person on payment of GST and availing dual benefit of paying the tax on margin and claiming input tax credit simultaneously. The GST is a value added tax and each person in the value addition chain is expected to pay tax on the value addition made by him in the transaction. The intention of promulgating Rule 32(5) is to ensure that a dealer operating in unorganized sector (buying second hand or used goods from unregistered persons or non-business entities) is not saddled with tax liability disproportionate to value addition done by him in transaction chain. In majority of the cases, the margin of such second hand goods dealer is less than the tax leviable on such goods under normal scheme of taxation and hence need for such provision. It is settled principle of interpretation that if a statutory provision is open to more than one interpretations, one has to choose that interpretation which represents the true intention of the legislature. A statute is to be construed according to the intent of them ....
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....ealings of goods that might come for auction in future. The advance ruling is not sought for historical transactions. Hence, it is difficult to provide invoices of items for which advance ruling is sought. However, applicant is enclosing herewith copies of sample invoices (along with description and offer as portrayed on website of applicant) for few goods recently auctioned by it. This will give fair idea of class of goods dealt with by the applicant. Your good office is requested to take cognizance of these submissions along with earlier submissions filed with application and also in course of personal hearing for passing the advance ruling order. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- It is submitted that, Issue on which advance ruling is required: The application for advance ruling can be filed for any of the question falling under Section 97(2). 1. 02. For the sake of clarity, the relevant extract of the CGST Act' 2017 is reproduced hereunder: 2. Section 97(2): The question on which the advance ruling is sought under this Act, shall be in respect of,- (a) Classification of an....
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....ibles and Memorabilia are not defined under GST ACT, 2017. The supply is not covered either by composite supply or mixed supply. Hence, the GST is applicable as per specific schedule rate (as per HSN of said items). 5.2 Whether Applicant is entitled to value following goods in accordance with Rule 32(5) of Central Goods and Service Tax Rules, 2017 (hereinafter referred to as "CGST Rules"): a) Paintings bought from individual collectors and connoisseur b) Old Cars, old jewelers and Old watches c) Antique jewellery, watches and books d) Collectibles and Memorabilia The Rule 32(5) of CGST Rules, 2017 reads as under:- "Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored. It is informed by the dealer that he has purchased the goods from unregistered dealer and....
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....submissions made by the applicant clearly indicate that they are requiring clarity on their tax liability in respect of the second hand or used goods in which they are dealing. We find that the applicant only deals with, and auctions those second hand or used goods which have been bought by them. In Other words they are trading in such goods and the auction is just a medium to sell the goods. It is not that they are auctioning the goods belonging to someone else and get only fees for performing the auction. Chapter IV of the CGST Rules, 2017 deals with the determination of value of supply and Rule 32(5) specificaIIy deals value of taxable supply when the same is provided by a person dealing in used/second hand goods and the said Rule is reproduced as under:- Rule 32(5):- "Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e. used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase or such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply ....
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....xcept tariff item 870310 10 (electrically operated vehicles specially designed for travelling on snow; golf cars and similar vehicles) and sub-heading 8703 80 (other vehicles, with only electric motor for propulsion). However old cars attract a lower rate of tax as per Notification No. 08/2018 CT (Rate) dated 25.01.2018. As per the said Notification, the lesser rate of tax i.e. 18 % is applicable to (a) Old and used, petrol Liquified petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more, (b) Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm or more and (c) Old and used, motor vehicles of engine capacity exceeding 1500 cc popularly known as SUVs, including utility vehicles. The explanation to this Notification is as follows:- Explanation -For the purposes of this notification, - (i) in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act, 1961(43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration r....
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.... the difference between sale price and purchase price considering such watches are second hand goods. (vi) Antique watches of age exceeding 100 years:- Tariff item 9706 00 00 covers 'Antiques of an age exceeding 100 years'. Antique watches of age exceeding 100 years will fall under this Tariff item and will be liable to tax @ 12% GST. The provisions of Rule 32(5) of CGST Rules will not be applicable to them in this case. (vii) Collectibles:- A collectible can be said to be an item valued and sought by collectors. Collectibles can be any product like a painting, shoes worn by a legend, watches, etc. The applicant has submitted that collectibles fall under Residuary Entry - Serial No. 453 of Schedule III - i.e. Goods which are not specified in Schedule I, Il, IV, V or VI. If the collectible is a watch then it will fall under the specific heading of watches. The Residual Entry mentioned above is only applicable to goods which are not specified in Schedule I, Il, IV, V or VI. The details of 'collectibles' has not been mentioned by the applicant and in the absence of specifics the question cannot be answered. (viii) Collectibles (Books):- A collectible can be ....
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.... of Rule 32(5) of CGST Rules will not be applicable to them in this case. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-86/2018-19/B-07 Mumbai, dt. 15-01-2019 For reasons as discussed in the body of the order, the questions are answered thus - Question 1.1. Whether Applicant is dealing in second hand goods and tax is to be paid on the difference between selling price and purchase price as stipulated in Rule 32 (5) of CGST Rules, 2017? Answer:- In view of the above discussions the liability will be discharged by the applicant on the difference between selling price and purchase price as stipulated in Rule 32 (5) of CGST Rules, 2017 only in respect of old cars, old jewellery and old watches. Question 1.2. The classification and HSN code of goods listed in table given in "Issues for Determination" and GST rates applicable to such goods. Answer :- (i) Paintings as described by the applicant will be classifiable under Heading 9701 and the applicant must pay GST of 12....