AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 265
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....vance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant submits that it proposes to be a manufacturer and general order supplier of gold and diamond ornaments. The applicant proposes to be a karigar and wants to provide order-based services required by the customer. 1.3. According to the applicant, the business activities being carried out by him may be summarized as follows: (a) The applicant purchases second hand gold or diamond jewelleries from unregistered individuals and thereafter repairs or reshapes these items by melting the old jewelleries....
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....eable to tax @ 5% under SAC: 9988? (5) Whether the applicant is liable to pay GST on the goods received from the buyer? 1.5 The aforesaid questions on which the advance ruling is sought for are found to be covered under clause (b) of sub-section (2) of section 97 of the GST Act. 1.6 The applicant states that the questions raised in the application have neither been decided by nor are pending before any authority under any provision of the GST Act. 1.7 The officer concerned from the revenue has raised no objection to the admission of the application. 1.8 The application is, therefore, admitted. Submission of the Applicant 2.1 The applicant submits that his business activities comprises of following scenarios: Case 1: The applicant supplies new gold jewellery or diamond jewellery and raises invoice on full value of the goods after procuring certain portion of old or second hand jewellery from the buyer. Case 2: New gold jewellery or diamond jewellery is provided and invoiced on making charge basis where making charges include value of gold loss and making / karigar charges. Case 3: New gold jewellery or diamond jewellery is suppli....
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....ments or diamond jewelleries / ornaments from unregistered individuals and supply it to registered / unregistered persons in the form of gold jewelleries / ornaments or diamond jewelleries / ornaments as per the requirement (like old bangle to bracelet or earring to locket) where nature of the product remains the same. Scenario I: As per dictionary meaning of "Nature" vide Oxford Languages: "Nature means the qualities or character of a person or thing" In the present case, old gold jewelleries / ornaments or diamond jewelleries / ornaments remain gold jewelleries / ornaments or diamond jewelleries / ornaments (like old bangle to bracelet or earring to locket). Nature of the product remains the same as quality and character remains the same. Scenario II: Tariff heading 7113 covers article of Jewellery and parts thereof, of precious metal or of metal clad with precious metal whether or not plated or clad with precious metal. Tarif term Description of Goods 7113 Articles of Jewellery and parts thereof, of precious metal or of metal clad with precious metal - Of precious metal whether or not plated or clad with precious metal 711311....
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.... making / karigar charges. • The value of gold and making charges, including the value of gold loss, are considered a composite supply. The principal supply is the gold ornaments, with the job work being an integral part of the service provided, Case 3: New gold jewellery or diamond jewellery is supplied and invoiced on making charge basis where making charges include making / karigar charges only. • The making charges do not include the value of gold loss. Therefore, the charges are classified as a supply of services, and GST at 5% is applicable. 2.8 The applicant concludes stating that if the supply is classified as goods, then the GST rate will be 3% and if the supply is classified as services then the GST rate will be 5%. Submission of the Revenue 3.1 The officer concerned from the revenue has not expressed any view in this regard. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorized representative of the applicant during the course of personal hearing. We have considered the questions as raised in the application on which advance ruling are sought by ....
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.... is taxable supply and hence the first condition is satisfied. 4.5 We now proceed to examine whether the conditions mentioned in para 2.3 (b) supra gets satisfied or not in the instant case. The benefit of margin scheme, as prescribed in rule 32 (5), is available where the second-hand goods is sold after minor processing only and where the nature of the goods do not change. The applicant contends that when the old gold jewellery is converted into a new one, the nature of goods as well as the characteristic and classification of the goods does not change. Tariff heading of the goods also remains the same i.e. 7113. However, we do not incline to accept the argument of the applicant. In the instant case, the applicant has submitted that he purchases second-hand gold or diamond jewelleries from unregistered individuals and thereafter repairs or reshapes these items by melting the old jewelleries and transforming those into new pieces, such as changing a gold bangle into a bracelet or an earring into a locket. There can be no denying that the item namely bangle is different from a bracelet. Similarly, when an earring is melted to convert it into a locket, it loses it's nature and cha....
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....d after minor processing that does not change the nature of the ornaments so purchased, the applicant can pay tax on the value as determined under rule 32 (5). 4.10 We are also of the opinion that rule 32 (5) is available only when a registered person dealing with buying and selling of second hand goods only. In other words where the registered person deals with different business activities such as engage in supply of services, manufacturing or selling new articles apart from dealing with buying and selling of second hand goods cannot avail the benefit of rule 32 (5). In such a case GST is payable at applicable rate on actual value of the commodity and not on margin value. In view of the above discussions, we rule as under: RULING Question 1: Whether the applicant falls under the category of a person dealing in buying and selling of second hand goods where tax is to be paid on the difference between the selling and purchase price as stipulated in Rule 32 (5) of the CGST Rules, 2017. Answer: The applicant can avail the valuation method as prescribed in sub-rule (5) of rule 32 of the Central Goods and Service Tax Rules, 2017 only in cases where the old gold ornaments/....