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2019 (3) TMI 841

ed lead acid batteries qualify as ‘second hand goods’ - Outward Supply under the Margin Scheme - GSTR-3B - Held that:- The used lead acid batteries qualify to be second hand goods. Accordingly, the Applicant dealer is entitled to operate under the Margin Scheme in respect of the used lead acid batteries. - In terms of Rule 2 of the Integrated Goods and Service Tax Rules, 2017, the Central Goods and Service Tax Rules, 2017, for carrying out the provisions specified in Section 20 of the Integrated Goods and Service Tax Act, 2017 shall, so far as may be, apply in relation to integrated tax as they apply in case of central tax. Section 20 of the IGST Act prescribes that the provisions of the CGST Act shall mutatis mutandis apply to various subjects which have been provided under Section 20 - The subject pertaining to ‘time and value of supply’ is covered under Section 20, hence the rules made under CGST Act in relation to valuation of a supply is applicable to IGST Act as well. - Rule 32(5) of the CGST Rules, 2017 which provides for Margin Scheme in case of intra-state supplies shall also be applicable in case of inter-state supplies and the applicant is entitled to make inter- .....

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ST Rules, 2017. f. Applicant s interpretation with respect to first question:- 1. It is submitted that normally GST is charged on the transaction value of the goods. However, in respect of second hand goods, a person dealing in such goods is 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. 2. Rule 32(5) CGST Rules, 2017 specifies that 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 ignored. The relevant extract of Section 32(5) of the CGST Rules, 2017 is reproduced below: (5) Where a taxable s .....

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d 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 ignored. This is known as the margin scheme. ….. 4. Thus, margin scheme can be availed of by any registered person dealing in buying and selling of second hand goods [including old and used empty bottles] and who satisfies the conditions as laid down in rule 32(5) of the Central Goods and Services Tax Rules, 2017. That the aforesaid clarification issued in respect of the used bottles shall squarely be applicable in respect of the used lead acid batteries as just like used bottles no processing is done on the used lead acid batteries. Therefore, in the Applicant s view, these used lead acid batteries qualify to be second hand goods. Accordingly, the Applicant dealer is entitled to operate under the Margin Scheme in respect of the used lead acid batteries. g. Applicant s interpretation with respect to second question:- When the Applicant is selling goods unde .....

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Tax Rules, 2017 ( CGST Rules, 2017 ) by selling the used lead acid batteries to other manufacturers whether such used lead acid batteries qualify as second hand goods and thus covered under the Margin Scheme notified under Rule 32(5) of the CGST Rules, 2017? 2. When the Applicant is selling goods under the Margin Scheme notified under Rule 32(5) of the Central Goods and Service Tax Rules, 2017. The Tax on Outward Supply under the Margin Scheme would be qualified under which of the following heading in GSTR-3B in following cases:- a) When Applicant selling the goods within the state? b) When Applicant selling the goods outside the state? 3.1 Tax on Outward and reverse charge Inward Supplies Nature of Supplies Total Taxable Value (a) Outward taxable supplies (other than zero rated, nil rated and exempted) (b) Outward taxable supplies (zero rated) (c) Other Outward Supply (nil rated, exempted ) (d) Inward Supply (liable to reverse charge) (e) Non GST Outward Supply 3.2 Inter State Supply Nature of Supply Total Taxable Supply Supplies made to Unregistered Persons Supplies made to Composition Taxable Person Supplies made to UIN Holders 3. When the Applicant is operating under the Margi .....

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points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession. d. As provided in Rule 32(5) of the CGST Rules, 2017, the margin scheme is available in case of purchase and subsequent sale of second hand goods. In the present case, the Applicant is primarily engaged in the activity of procuring the second hand lead acid batteries (hereinafter referred to as batteries ) in small quantities (50 to 100 kg approx.) from various unregistered suppliers situated within the State of Rajasthan and outside Rajasthan. e. For goods to qualify as second hand goods as per Rule 32(5) of the CGST Rules, 2017 such goods need be (1) used goods as such or goods after minor processing that does not change the nature of goods (2) goods on which no Input Tax Credit has been availed. f. It is observed that used lead acid batteries are used goods and no processing is done on such goods. Therefore, these used lead acid batteries qualify as second hand goods, further, the Applicant does not avail Input Tax Credit on such used lead acid batteries. Therefore, we find that, the used lead acid batteries qualify to be second hand goods. Acc .....

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es; (xxii) job work; (xxiii) electronic commerce; (xxiv) transitional provisions; and (xxv) miscellaneous provisions including the provisions relating to the imposition of interest and penalty, shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this Act: The subject pertaining to time and value of supply is covered under Section 20, hence the rules made under CGST Act in relation to valuation of a supply is applicable to IGST Act as well. In accordance with the above facts of law, we find that, Rule 32(5) of the CGST Rules, 2017 which provides for Margin Scheme in case of intra-state supplies shall also be applicable in case of inter-state supplies and the applicant is entitled to make inter-state supplies of used lead acid batteries while operating under the Margin Scheme. 6. In view of the foregoing, we rule as follows:- RULING 1. The used lead acid batteries qualify to be second hand goods. Accordingly, the Applicant dealer is entitled to operate under the Margin Scheme in respect of the used lead acid batteries. 2. The query raised by the applicant is not specified in Section 97 ( .....

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