TaxTMI 
TaxTMI 
2025 (4) TMI 224
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....me. 3. In view of the aforesaid, the applicant has sought advance ruling on the below mentioned questions viz "1. Can the applicant opt for valuation of outward supply as per rule 32 (5) of the CGST Rules, 2017 for the new line of business solely [ie only for dealing in second hand goods] besides following regular rules for their existing business? 2. Can the applicant opt for valuation of outward supply only for acquisition made from unregistered dealer and for acquisition from registered dealer they continue to pay GST as regular mode [ie by discharging GST on full amount of sales consideration and claim ITC on acquisition cost]? 3. What will be the amount of difference as per Rule 32 (5) for dealing in second hand goods? Does purchase price as per Rule 32 (5) include cost of repair/improvement? 4. If the purchase price does not include cost of repair/improvement than can ITC of such repair/improvement cost can be claimed? 5. Does e way bill and e-invoicing applicable for appellant if they follow margin scheme? If yes then which value should be shown in e-way bill and e-invoice and in which section as the data of e-way bill and e-in....
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....e of disposal by the person making such repossession. • Relevant extracts of the flyer [Margin Scheme in GST] Chapter Thirty Margin Scheme in GST Normally GST is charged on the transaction value of the goods. However, in respect of second hand goods, a person dealing is such goods may be allowed to pay tax on the margin i.e. the difference between the value at which the goods are supplied and the price at which the goods are purchased. If there is no margin, no GST is charged for such supply. The purpose of the scheme is to avoid double taxation as the goods, having once borne the incidence of tax, re-enter the supply and the economic supply chain. Valuation of Second Hand Goods: As per Rule 32 (5) of the CGST Rules, 2017, 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....
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....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. Q 34. How will supplies being made by a person dealing in second hand goods be valued under GST? Ans. 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 purchase of such goods, the value of supply shall be the difference between the selling price and purchase price and where the value of such supply is negative it shall be ignored. 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....
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....led on purchases meaning thereby that the taxes paid on forward charge basis or on RCM [reverse charge mechanism] basis shall not be claimed as ITC; • that losses cannot be set off; • that since there is no distinction between new goods and second-hand goods under the GST laws, the rates applicable to new goods are to be applied even in case of second hand goods. 10. Based on the aforementioned, we wish to answer the questions posed before the authority. The first question raised by the applicant is - whether they can opt for valuation of outward supply as per rule 32 (5), ibid. for dealing in second hand goods, while following regular rules for their existing business? 11. Since nothing is produced before us which takes a contrary view, we hold that the applicant can opt for valuation of outward supply in terms of Rule 32 (5), ibid for dealing in second hand goods while simultaneously following the normal valuation practice for their existing business. 12. Moving on to the second question, raised by the applicant viz - whether the applicant can opt for valuation of outward supply only for acquisition made from unregistered dealer and for acquisit....
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....and the purchase price and would not include the cost of repair/improvement. The above finding stands substantiated by the ruling of Appellate Authority in the case of Tej Kumar Jain Rajasthan Appellate Authority for Advance Ruling order No. Raj/AAAR/2/21-22 dtd 10.12.21. 17. Moving on to the fourth question, raised by the applicant viz - If the purchase price does not include cost of repair/improvement then can ITC of such repair/improvement, be availed? 18. The wordings of Rule 32 (5), also known as 'margin rule', clearly states that no ITC can be availed on the purchase. The rule provides for minor processing on the second hand goods ie used goods, provided it does not change the nature of the product. If the Legislature intended on allowing ITC in respect of such minor processing, rule 32 (5), ibid, would have provided for availment of ITC in respect of such minor processing. That not being the case, we hold that the applicant is not eligible for availment of ITC in respect of the cost of repair/improvement. 19. Moving on to the fifth question, raised by the applicant viz - whether e-way bill and e-invoicing is applicable for appellant if they follow margin scheme? If ....