AI Drafter 
TaxTMI 
TaxTMI 
2023 (7) TMI 523
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....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? 4. The contentions of the Applicant 4.1. The applicant submits that they purchase gold from unregistered persons who are all general public and the ornaments purchased will be sold 'as such' to the end consumers without making any further processing, in other words, sold in the same form in which the ornaments were purchased, to another registered or unregistered person, except for some minor processing in the form of cleaning and polishing but without altering the nature of such ornament/jewellery. It is further submitted that since the applicant had purchased the old/used/second-hand gold ornaments/jewellery predominantly from unregistered persons there is no scope for availing of the input tax credit as per Section 16 of the CGST Act. Presently, the applic....
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....credit has been availed on purchase of such goods. The term 'second-hand goods' or 'used goods' are not defined by either under CGST Act or CGST Rules. Similarly, the term second-hand goods or used goods is also not defined in General Clauses Act. Since there is no statutory definition for second-hand goods as well as used goods, it is submitted that the dictionary meaning or trade parlance meaning of second-hand goods or used goods has to be construed for its interpretation in Rule 32(5), which are as below: 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) Used goods:- i. already owned or put to a purpose by someone else; not new (Cambridge Dictionary) ii. that has endured use (Merriam Webster) 4.4. Further it is also submitted that it is settled jurisprudence that when the words....
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....ill alone be done. Thus, the applicant is selling the old / used / second-hand gold ornaments/jewellery only as 'as such'. 4.6. It is further added that the applicant is a dealer in the secondary market dealing in second-hand goods. Generally, the jewellery market is divided into two segments i.e., the primary market and the secondary market. A primary market means 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. 4.7. Further it is also submitted that if Rule 32(5) is being interpreted to take a view that Rule 32(5) applies only to the said 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 the majority of tr....
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....4) TMI 122-SC • District Mining Officer Vs. Tata Iron and Steel Co. (AIR 2001 SC 3134) = 2001 (7) TMI 1277-SC • Bhatia International Vs. Bulk Trading SA (AIR 2002 SC 1432) = 2002 (3) TMI 824 - SC • South Asian Industries (Pvt) Ltd. Vs. Sarup Singh (AIR 1966 SC 346) = 1965 (4) TMI 112-SC • Kartar Singh Vs. State of Punjab [JT (1994) 2 SC 423) = 1994 (3) TMI 379 - SC • Narayanaswami Vs. Panneerselvam (AIR 1972 SC 2284) = 1972 (4) TMI 95 -SC Rule 32(5) 4.11. Such presumptive schemes are promulgated for trade facilitation or convenience of tax administration. Once such a valuation scheme is on the statue book, it is mandatory for the 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 the value of such goods and irrespective of the nature of such goods. 4.12. In the backdrop of the above discussions, since the applicant has fulfilled all the conditions specified in Rule 32(5) of the CGST Rules, the applicant is stating that, the applicant is very much eligible to adopt the....
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....chase price and whether the GST liability of the applicant will be limited to the difference value. Section 15 of the Act which provides for the value of taxable supply reads: Section 15. Value of taxable supply,- 1. The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the safe consideration for the supply. The section further provides that, 2. The value of supply shall include,- a. any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the Central Goods and Services Tax Act, 2017 (Central Act 12 of 2017) and the Goods and Services Tax (Compensation to States) Act, 2017 (Central Act 15 of 2017) if charged ? separately by the supplier; b. any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; c. incide....
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....as 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: Provided that 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 five percentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession. 7.3. The crucial aspect to be examined through the ruling is whether gold is a commodity whose/ which value changes when the owner ship changes. 7.4. Given the context, it will be appropriate to analyse gold as a commodity which has universal usage. It is pertinent to note that all most all central banks hold and manage gold in their foreign reserves portfolios. It played a dominant role in the international monetary system when currency rates were linked to the price of gold. Though the fixed currency system ended in 1973, diminishing gold's role, it still remains as an im....