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2020 (4) TMI 690 - AUTHORITY FOR ADVANCE RULING KARNATAKAValuation - Input Tax Credit - Purchase and sale of second hand goods being old jewellery - applicability of sub-rule (5) of rule 32 of Central Goods and Services Tax Rules, 2017 - purchases made from the dealer from whom marginal scheme if applicable - purchases used / second hand gold jewellery from individuals who are not dealers under the GST and at the time of sale there is no change in the form/ nature of goods? HELD THAT:- In the instant case, the supplier, i.e. the applicant is effecting the supply of second-hand 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 KGST Act, 2017 also at 1.5%. Hence the supplier satisfies the condition that the supply made by him must be a taxable supply. The supplier must be a person dealing in buying and selling of second-hand goods. It is seen that the applicant has admitted that he is purchasing used gold jewellery from individuals and selling the same, after cleaning and polishing them. He must not avail any input tax credit on the purchase of such goods. The goods so purchased must be supplied as such and if at all any process is involved, that must not change the nature of the product - it is clear that, subject to the condition of invoicing them as “second hand jewellery”, the applicant satisfies the second condition also. The valuation of the supply of second hand jewellery may be made as prescribed in sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules, 2017. Whether ITC is allowed to be claimed if purchases are made from the dealer whom marginal scheme is applicable? - HELD THAT:- The applicant, if he purchases the second hand goods from other registered persons, then the applicant can claim the input tax credit on such purchases if he is eligible to claim under section 16 of the GST Act, 2017 and in that case, he would become ineligible to apply marginal scheme for supplies of such second hand goods.
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