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TMI Blog2019 (6) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 02 FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH THE ADVANCE RULING IS SOUGHT 1. This Application is being filed by Safset Agencies Private Limited (Astaguru.com) ("Applicant"). 2. Applicant, having Good and Service Tax ("GST") Registration No. 27AABCS9352H124. 3. Applicant is an auctioneer dealing in various goods such as paintings, vintage collectibles, sculptures, classic miniatures paintings, fine writing instruments, vintage timepieces, celebrity memorabilia, aristocratic jewellery and vintage cars (hereinafter referred to as "goods"). 4. Applicant usually procures the above-mentioned goods on approval basis from unregistered as well as registered persons ("s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t mainly deals in following: * Paintings procured from individual art collectors, artists or other art dealers. * Old jewellery, cars, watches, etc. including vintage cars. * Memorabila/CoIIectibles such as clothing, sport equipment, spectacles, accessories, autographs of celebrities and renowned personalities. * Antiques consisting mainly of antique books, jewellery, watches and other articles. 7. The different practices prevailing in the trade as to classification, valuation and applicable GST rates on above referred goods are summarized as under: Particulars Alternative 1 Alternative 2 Paintings: Bought from artist 12% on sale value (HSN Code: 9701 12% on sale value (HSN Code: 9701) Bought from other art dealers 12% on sale value HSN Code: 9701) 12% on sale value (HSN Code: 9701) Bought from individual art collectors 12% on sale value HSN Code: 9701) 12% on difference between sale price and purchase second hand goods as provided under Rule 32 (5) Cars: New cars 28% on sale value (HSN Code: 8703) 28% on sale value (HSN Code: 8703) Old cars 18% on sale value (HSN Code: 8703) Based on Notification No. 08/2018 dated 25.01.2018 18% on difference bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which are not specified in Schedule l, II, IV, V or Vi) 18% on difference between sale price and purchase price considering watches as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule I, II, IV, V or VI) Antique Books 12% on sale value (HSN Code: 9706) or on different between sale price and purchase price considering books as second hand goods as provided under Rule 32(5) of CGST Rule. (HSN Code: 9706) 0% on sale value (HSN Code:4901) Collectibles/Memorabilia: Articles such as clothing, sporting equipments, books, autographs, photographs and such other items Applicable rate of said items Residuary Rate (18%) by treating collectibles and memorabilia as separate class of goods (HSN Code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule l, II, IV, V or VI) or Applicable rate on difference between sale price and purchase price treating watches as second hand goods as provided under Rule 32(5) of CGST Rules. 8. Applicant is confused as to classification and applicable GST rates on goods dealt with by it and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s second hand goods as provided under Rule 32(5) of CGST Rules. (HSN Code: 9706) 18% on sale value considering watches as normal watches. (HSN Code: 9101/9102) or on difference sale price and purchase price considering watches as second hand second hand goods as provided under Rule under Rule 32(5) of CGST Rules. (HSN Code: 9101/9102) Books: Collectibles 18% on sale value (HSN Code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule l, II, IV, V or VI) 18% on difference between sale price and purchase price considering watches as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule I, II, IV, V or VI) Antique Books 12% on sale value (HSN Code: 9706) or on different between sale price and purchase price considering books as second hand goods as provided under Rule 32(5) of CGST Rule. (HSN Code: 9706) 0% on sale value (HSN Code:4901) Collectibles/Memorabilia: Articles such as clothing, sporting equipments, books, autographs, photographs and such other items Applicable rate of said items Residuary Rate (18%) by treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity of being heard: 1.1. Whether Applicant is dealing in second hand goods and tax is to be paid on the difference between selling price and purchase price as stipulated in Rule 32 (5) of CGST Rules, 2017? 1.2. The classification and HSN code of goods listed in table given in "Issues for Determination" and GST rates applicable to such goods. Further Submissions before Hon'ble Advance Ruling Authority (GST Maharashtra) Facts and Background: 1. Applicant has filed an application for advance ruling on 16.10.2018 along with statement of facts, issues for determination and the submissions. 2. Pursuant to personal hearing on 14.1 1.2018, Hon'ble Advance Ruling Authority hereinafter referred as to as "ARA") has accepted Applicant's application for further processing and final hearing. 3. Applicant has sought advance ruling on following two issues: a. Classification: i. Antique jewellery - whether classifiable under HSN Code 9706 attracting 12% GST or HSN Code 7113 attragting 3% GST? ii. Antique Watch - whether classifiable under HSN Code 9706 attracting 12% GST or HSN code 9101/9102 attracting GST? iii. Antique Book - whether classifiable under HSN Code 9706 attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g one hundred years 12% on sale value (HSN Code: 9706) 0% on sale value (HSN Code:4901) Other Antiques: Other than jewellery, watches and books such as idols, sculptures, paintings, furniture, etc., of an age exceeding one hundred ears 12% on sale value (HSN Code: 9706) Applicable rate of said items (HSN of said items) Collectibles/Memorabilia: Articles such as clothing, sporting equipments, books, autographs, photographs and such other items Applicable rate of said items (HSN on said items) Residuary Rate (18%) by treating collectibles and memorabilia as separate class of goods (HSN Code: Residuary Entry - Serial No. 453 of Schedule III - Goods which are not specified in Schedule l, II, IV, V or VI) The relevant extract of Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017 specifying the HSN codes and the tax rate of respective goods is enclosed herewith at Annexure 1. Notification No. 8/2018 - Central Tax (Rate) dated 25.01 2018 prescribes the tax rate for old and used car. The copy of said notification is enclosed at Annexure 2. b. Explanation (iv) to the Rate Notification No. 1/2017 - Central Tax(Rate) dated 28.06.2017 clearly states that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 32 of CGST Rules prescribing the manner of determination of value in respect of specified goods and services. b. Rule 32(5) of CGST Rules provides 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. As per Rule 32(5) of CGST Rule, the term "second hand goods" means 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. Extract of relevant rule is enclosed herewith at Annexure 6. c. Rule 32(5) of CGST Rules applies to the "second hand goods" or "used goods". The term "second hand goods" or "used goods" is not defined in the CGST Act or CGST Rules. It is not defined under General Clauses Act. Hence, one has to go by the dictionary meaning or common parlance meaning of the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001 SC 1980) = 2001 (3) TMI 976 - SUPREME COURT iii. Swedish Match AB v/s Securities and Exchange Board of India (AIR 2004 SC 4219) = 2004 (8) TMI 389 - SUPREME COURT iv. Government of Andhra Pradesh v/s Road Rollers Owners Welfare association [2004 (6) SCC 210] = 2004 (4) TMI 602 - SUPREME COURT In light of above submissions, Applicant humbly submits that valuation of supply of old cars, old watches, old jewellery, old books, paintings, antiques and memorabilia should be done in accordance with Rule 32(5) of CGST Rules. Further Submissions on 10.012019 A. Nature of Applicants business in brief: As explained in course of personal hearing, Applicant is an auctioneer predominantly dealing in personal effects received from the users or collectors, Usually market is divided into two main segments i.e. primary market and secondary market. A primary market refers to when any goods comes to the market for the first time at a retail shop or any other way. 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 (whether a collector or consumer} decides to sell it, such goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is well-settled jurisprudence principle that when the words of a statue are clear, plain or unambiguous i.e. they are reasonable susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of consequences. Moreover, if the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. This principle of interpretation is followed in plethora of judgments; few of such judgments are as under: * Nelson Motis v/s Union of India (AIR 1992 SC 1981) = 1992 (9) TMI 355 - SUPREME COURT * Gurudevantt VKSSS Maryadit v/s State of Maharashtra (AIR 2001 SC 1980) = 2001 (3) TMI 976 - SUPREME COURT * Swedish Match AB v/s Securities and Exchange Board of India (AIR 2004 SC 4219) = 2004 (8) TMI 389 - SUPREME COURT * Government of Andhra Pradesh v/s Road Rollers Owners Welfare association [2004 (6) SCC 210] = 2004 (4) TMI 602 - SUPREME COURT Applicant reiterates that being an auctioneer of used or second hand personal effects, Rule 32(5) of CGST Rules clearly and unambiguously applies to it as person dealing in second hand goods. ii. One of the condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dealer is less than the tax leviable on such goods under normal scheme of taxation and hence need for such provision. It is settled principle of interpretation that if a statutory provision is open to more than one interpretations, one has to choose that interpretation which represents the true intention of the legislature. A statute is to be construed according to the intent of them that make it and the duty of judicature is to act upon the true intent of the legislature i.e. mens or sententia legis (Salmond: "Jurisprudence" 11th Edition). This principle of interpretation has been enshrined in various judicial pronouncements including the following: * Venkataswami Naidu, R vs Narasram Naraindas (AIR 1966 SC 361) = 1965 (4) TMI 122 - SUPREME COURT * District Mining Officer vs Tata Iron and steel co. (AIR 2001 SC 3134) = 2001 (7) TMI 1277 - SUPREME COURT * Bhatia International vs. Bulk Trading SA (AIR 2002 SC 1432) = 2002 (3) TMI 824 - SUPREME COURT * South Asia Industries (Pvt) Ltd vs. Sarup Singh (AIR 1966 SC 346) = 1965 (4) TMI 112 - SUPREME COURT * Kartar Singh vs. State of Punjab [JT(1994)2 SC 423] = 1994 (3) TMI 379 - SUPREME COURT * Narayanaswami vs. G. Panneer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed for any of the question falling under Section 97(2). 1. 02. For the sake of clarity, the relevant extract of the CGST Act' 2017 is reproduced hereunder: 2. Section 97(2): The question on which the advance ruling is sought under this Act, shall be in respect of,- (a) Classification of any goods or services or both: (b) Applicability of a notification issued under provisions of the GST ACT(s); (c) Determination of time and value of supply of Goods or services or both; (d) Admissibility of input tax credit of tax paid or deemed to have been paid; (e) Determination of the liability to pay tax on any goods or services under the Act; (f) Whether applicant is required to be registered under the Act; (g) Whether Any particular thing done by the applicant with respect to any goods or services amounts to or result in a supply of goods or services amounts to result in a supply of goods or services, within the meaning of that term. 04. In view of above, the question posed by the applicant may be covered by the clauses, (a), (c) and (e) of section 97 (2) of CGST/MGST ACT, 2017. Hence. the application may be accepted to decide the questions. 05. Facts and Backgr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the purchase price and where the value of such supply is negative, it shall be ignored. It is informed by the dealer that he has purchased the goods from unregistered dealer and there is no incidence of RCM. Hence there is no question of forgo of availment of ITC. The Antique goods means:- The collectable objects have a high value because of its age and quality. The value of antiques is affected by many different factors. The Age, Quality of work and material rarity, condition, Market demand, Manufacturer or kiln mark or autograph of legend. Antiques that are highly sought after but are scarce can usually command a better price. In individual situations another factor is the value attributed to a specific antique by its owner, and the price a collector is willing to pay to obtain it for his/her collection. In other words, this is dependent on the demand and supply situation on the antique market. Therefore, the actual value of an antique may never be the same at two points in time, or in two or more different sales locations. The Antique goods are very special in character and have inherent value cannot be treated as second hand goods. Hence the Rule 32(5) of CGST Rules, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled on the purchase or 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'. A reading of the said rule clearly states that in the subject case the value for tax purposes will be the difference between the selling price and the purchase price in case the selling price is more than the purchase price. In the event that the selling price is less than the purchase price, in that case the value shall be ignored, which implies that in such a case there will be no tax liability. This would cover cases where the applicant has purchased the said goods on payment of GST and not availed ITC of such payments made. Another situation can arise in such cases when the seller of the said goods is not liable to register under the GST laws due to the reason of having turnover below the threshold limit. In such a case there will be no payment Of GST and therefore the question of ITC would not arise. In such a situation it is seen that the Government will not get any tax on the sale by the seller. This kind of situation has not been covered under the GST laws and applying the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply, and where the margin of such supply is negative, it shall be ignored; and (ii) in any other case, the value that represents the margin of supplier shall be, the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored. This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods. Hence for the applicant to avail the benefit of lower taxes under the said Notification, the conditions mentioned therein must be fulfilled. Except submitting that they are dealing in Old cars, they have not submitted any other details. It is also seen that the provisions of Rule 32(5) of CGST Rules are applicable to them, subject to the conditions of the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion cannot be answered. (viii) Collectibles (Books):- A collectible can be said to be an item valued and sought by collectors. Collectibles can be any product like a painting, shoes worn by a legend, watches, etc. The applicant has submitted that collectibles (books) fall under Residuary Entry - Serial No. 453 of Schedule III - i.e. Goods which are not specified in Schedule I, II, IV, V or VI. In the subject case the goods, if it is in the form of printed books, newspapers, pictures, etc. will fall under the various sub headings of Chapter 49 of the GST Tariff as the case may be. The Residual Entry mentioned above is only applicable to goods which are not specified in Schedule I, II, IV, V or VI. The specific details and description of 'collectibles (books)' has not been mentioned by the applicant and in the absence of specifics the question cannot be answered. (ix) Antique Books:- Such articles will be covered under Tariff item 9706 00 00 only they are exceeding 100 years of age. If the antique books are under 100 years of age then they will be classified under the appropriate heading of the GST Tariff. Antique books of less than 100 years of age, if it is in the form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Heading 9701 and the applicant must pay GST of 12% on the sale value. (ii) Old Cars:- Motor Vehicles fall under Heading 8703 of the GST Tariff. All the items under 8703 attract 28% GST except Tariff item 870310 10; Sub-heading 8703 80. However old cars attract a lower rate of tax as per Notification No. 08/2018 CT (Rate) dated 25.01.2018. As per the said Notification, the lesser rate of tax i.e. 18 % is applicable to old cars provided the conditions mentioned therein are fulfilled. Except submitting that they are dealing in old cars, they have not submitted any other details. It is also seen that the provisions of Rule 32(5) of CGST Rules are applicable to them, subject to the conditions of the Notification No. 08/2018 CT (Rate) dated 25.01.2018 being satisfied by them. (iii) Old Jewellery:- Articles of jewellery and parts thereof falls under Heading 7113 of the GST Tariff. The provisions of Rule 32(5) of CGST Rules are applicable to them in respect of old jewellery which are purchased by them and then sold by them. (iv) Antique jewellery of age exceeding 100 years:- Antique jewellery of age exceeding 100 years will fall under Tariff item 9706 00 00 and will be liable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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