TMI Blog2020 (4) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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. - KAR ADRG 15/2020 - - - Dated:- 23-3-2020 - DR. RAVI PRASAD M.P. AND SRI. MASHHOOD UR REHMAN FAROOQUI, MEMBER Represented by: Sri. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, then GST is not applicable on such transaction. d. The applicant states that this issue is already heard in the case of Safset Agencies Private Limited by the Maharashtra Advance Ruling Authority [Order no. GST-ARA-86/2018-19B Mumbai dated 15.01.2019 = 2019 (6) TMI 822 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] where the dealer who deal in old jewellery and that jewellery falls under Heading 7113 of the GST Tariff, which overs Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal. The provisions of Rule 32(5) if CGST Rules are applicable to them in respect of old jewellery which are purchased by them. It is clarified that he can avail the benefit of Margin Scheme. e. The applicant states that his contention is that he is also engaged in sale of second hand goods having GST Tariff 7113, he can also avail the benefit of Margin Scheme under GST. f. The applicant explains that Rule 32(5) of the CGST Rules 2017 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Maharashtra Advance Ruling Authority in support of his contentions. 4. Sri Muniraju.P.R., Chartered Accountant and duly authorised representative of the above concern appeared and made the following submissions: a. That the applicant is involved in the purchase and sale of second hand jewellery and is no conversion is made using the above materials. Further he stated that the applicant is only cleaning and polishing the old used second hand jewellery and selling the same as such. b. He also brought to the notice that a press release issued bearing date 13.07.2017 captioned Further Clarification on tax in reverse charge on gold ornaments . The contents are reproduced and the same reads as under: In the GST master class held on 73.072017, in one of the replies given to an on-the-spot question, it was informed that purchase of old gold jewellery by a jeweller from a consumer will be subject to GST @ 3% under reverse charge mechanism in terms of the provisions contained in Section 9(4) of the CGST Act, 2017. 2. On further examination, it is felt that the issue needs to be clarified. 3. Section 9(4) of the said Act mandates that tax on supply of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing were all verified and the issues that needs to be addressed is related to whether the applicant is eligible to utilise the sub-rule (5) of rule 32 of Central Goods and Services Tax Rules, 2017. 6.1 Rule 32 of the CGST Rules, 2017 reads as under: Rule 32. Determination of value in respect of certain supplies.- (1) Notwithstanding anything contained in the provisions of this Chapter, the value in respect of supplies specified below shall, at the option of the supplier, be determined in the manner provided hereinafter. (2) .. (3) .. (4) .. (5) 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: Provided that the purchase value of goods repossessed from a defaulting borrower, who is not registered, for the purpose of recovery of a loan o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery may be made as prescribed in sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules, 2017. 7. Regarding the other question, whether ITC is allowed to be claimed if purchases are made from the dealer whom marginal scheme is applicable, the following are noticed: 7.1 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. 8. In view of the foregoing, we rule as follows RULING 1. In the case of applicant dealing in second hand goods and invoicing his supplies as second hand goods , the valuation of supply of second hand gold jewellery which are purchased from individuals who are not registered under GST and there is no change in the form and nature of such goods, can be made as prescribed under sub-rule (5) of rule 32 of the Central Goods and Service Tax Rules. 2. In case the applicant purchases second hand jewellery from registered person, the applicant is eligible to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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