TaxTMI 
TaxTMI 
2022 (4) TMI 1137
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....plicant) are registered under GST with GSTIN 33AAGCB1247B1ZD. The applicant has sought Advance Ruling on the following question: In case the applicant has purchased used/second hand gold jewellery or ornaments from persons who are not registered under GST and that at the time of sale of such goods there is no change in the form/nature of such goods and ITC will also not be availed on such purchase, if so the case, whether GST is to be paid only on the difference between the selling price and purchase price as stipulated under Rule 32(5) of CGST Rules, 2017? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are engaged in the business of buying and selling of old/used/second hand gold jewellery/ornament from the unregistered person, who are all general public and will be sold 'as such' to the end consumers. They are also having branches across Tamil Nadu. They have stated that the used/second hand gold ornaments are sold in the same form in wh....
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....ry meaning or trade parlance meaning of 'Second-hand goods' or used goods' for interpretation in Rule 32(5), which are as below: A. Second Hand Goods: i. Second-hand things are not new and have been owned by someone else (Collins Dictionary) ii. having had a previous owner; not new (English Oxford Dictionary) iii. not new; having been used in the past by someone else (Cambridge English Dictionary) iv. acquired after being used by another (Merriam Webster) v. previously used or owned (Dictionary.com) B. Used Goods: i. already owned or put to a purpose by someone else; not new (Cambridge Dictionary) ii. that has endured use (Merriam Webster) 2.3 The applicant has further stated that it is settled jurisprudence that when the words of a statute is clear, plain and 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 explicate those words in their natural and ordinary sense. The applicant ....
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....market is divided into two segments (i.e.) i.e. primary market and secondary market. A primary market means market where goods come for the first time at a retail shop or any other way for reaching ultimate consumers. This is the time when the price for the goods is established for the first time. Once the goods are purchased from the primary market and when such purchaser or consumer decides to sell it, such goods enter the secondary market either as used goods or as second-hand goods. The Applicant is one such dealer in the secondary market procuring second-hand or used Jewellery or Gold Ornament from unregistered persons or end users. 2.5 Further they have submitted that if Rule 32(5) is being interpreted to take a view that Rule 32(5) applies only to sale of goods, which are purchased on payment of GST and where credit of such tax is not availed. This interpretation will make Rule 32 (5) redundant in majority of transactions as such second hand or used goods are normally purchased from individuals not liable to tax as such goods are not sold by them in course or furtherance of business. If this interpretation is taken, most of the dealers in second hand goods will not be ent....
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....s. Sarup Singh (AIR 1966 SC 346) = 1965 (4) TMI 112 - SUPREME COURT • Kartar Singh vs. State of Punjab [JT(1994) 2 SC 423] = 1994 (3) TMI 379 -SUPREME COURT • Narayanaswami vs. G. Panneerseviam (AIR 1972 SC 2284) = 1972 (4) TMI 95 - SUPREME COURT Rule 32(5) 2.7 They have stated that such presumptive schemes are promulgated for trade facilitation or for convenience of tax administration. Once such valuation scheme is on the statue book, it is mandatory for Assessee as well as tax authorities to follow it in letter and spirit, irrespective of revenue considerations. Once the goods are second hand or used goods, Rule 32(5) is applicable irrespective of value of such goods and irrespective of nature of such goods. 2.8 In view of the above facts, the applicant has stated that they have fulfilled all the conditions specified in Rule 32(5) of the CGST Rules and they are eligible to adopt the Margin Scheme for determination of value of supply of such Old / Used / Second hand Jewellery and thereby they can arrive at the value of such goods as the difference between the value at which the goods are supplied and the price at which the goods arc purchased. If th....
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....d Gold / ornaments offered for sale is used by them for a longer period and also not stolen goods. Further the seller will also give a declaration that jewels which are being offered for sale is free from encumbrances. In case of any legal issue, all the remedies will be borne by the seller alone. iv. Detailed sale Agreement / promissory Note containing various terms and conditions applicable for sale duly signed by the seller. v. Declaration to Police Station and to the Best Money Gold Jewellery Limited by the Seller regarding the sale of Old Gold/ jewels. • • Authentication of the seller is being verified by the designated Department in detail along with the above documents. • old Gold / Jewels purchased will be subject to the detailed technical evaluation by the technical team of the company and will estimate the weight and quality of the old Gold / Jewels for valuation. • Details of the list of jewels of ornaments viz., Bangles, Necklace, Ring, etc is specifically mentioned in the sale agreement along with the Weight, Wastage, etc. • After valuation, the sale amount will be paid to the sellers ei....
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....d by the applicant and various submissions made by them. Applicant is stated to be engaged in the business of buying and selling of old/used/second hand gold jewellery/ornament from the unregistered person, who are all general public. They have stated that these articles will be sold 'as such' to the end consumers, i.e., the used/second hand gold ornaments so purchased are sold in the same form in which they are purchased to another registered or unregistered person, except for some minor processing in the form of cleaning and polishing, without altering the nature of such ornament/jewellery. They have stated that as they purchase old/used/second hand gold jewellery/ornament from the unregistered persons, there is no scope for availment of Input tax credit as per Section 16 of the CGST Act for them as such unregistered person will not charge GST. They have stated that presently they are charging GST at 3% [CGST-1.50% ; TNGST -1.50%] on the entire consideration received from the customers on account of sale of such old/used/second hand gold jewelry/ornament. In view of the above facts, the applicant is seeking the authority to determine the value of supply as per Section 15(5) of CG....
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....x credit has been availed on the purchase of such goods. 7.3 In the instant case, the applicant is effecting the supply of jewellery which is taxable under the GST Act as it is covered under entry no.13 of Schedule V to the Notification No.01/2017-Central Tax (Rate) dated 28th June, 2017 which is taxable at 1.5% under the CGST Act and similarly taxable under the SGST Act, 2017 also at 1.5%. Hence, the supplier satisfies the condition that the supply made by him must be a taxable supply. 7.4 The second condition is that the supplier shall be 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 goods. In this respect the applicant has submitted that the old/used gold jewels in the form of say Bangles, Ring, Necklace etc are purchased and after completing certain formalities such as (i) Verification of KYC of the seller, the Occupation and address proof (ii) Application for acceptance of sale of old gold (iii) Declaration of the seller that the old gold/ornaments offered are not stolen goods and have been used for a long time, that they are without any en....
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....imikki and ring. However, Purchase receipt number/grammage for such purchase is not indicated in the said sale invoice. Also, in the purchase invoice submitted the ornaments said to have purchased do not include the 'Stud with Jimikki' and 'ring' and hence from the furnished documents, we are constrained to verify the claim of the applicant that he undertakes sale of used goods. 8.2 During the hearing held on 20.01.2022, the applicant was specifically asked to furnish 'write-up on the process undertaken from Purchase of the Old Gold to the end sale with the documents/trail of accounts at each stage along with accounting for sale as second-hand'. The applicant did not furnish the details and notice was sent to him on 09.02.2022 and on 02.03.2022 requiring him to furnish such details. The applicant has furnished the detailed flow chart exhibiting the process of purchase and sale of old gold/jewels, but the same is not substantiated with Purchase to end stage documents & the accounting of the purchase, process undertaken and sale of such goods as required by this Authority. Advance ruling is a facility extended and the person seeking the same has to furnish the details as required ....