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2019 (6) TMI 822 - AAR - GSTClassification of second hand goods - GST Rate - Rule 32(5) of Central Goods and Service Tax Rules, 2017 - Paintings bought from individual collectors and connoisseur - Old Cars, old jewelers and Old watches - Antique jewellery, watches and books - Collectibles and Memorabilia - 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? - HELD THAT - The applicant only deals with, and auctions those second hand or used goods which have been bought by them. In Other words they are trading in such goods and the auction is just a medium to sell the goods. It is not that they are auctioning the goods belonging to someone else and get only fees for performing the auction - This kind of situation has not been covered under the GST laws and applying the principles of Rule 32 (5) of the CGST, Rules we find that the value of supply shall still be the difference between the selling price and the purchase price and tax liability will have to be discharged accordingly. Classification of goods - Rate of tax - Antique jewellery - Antique Watch - Antique Book - Collectibles and Memorabilia - whether classifiable under HSN Code 9706 or otherwise?. Paintings bought from individual art collectors - HELD THAT - The applicant has requested for classification of paintings bought from individual art collectors. Chapter 9701 of the GST Tariff, 2017 covers Paintings, drawings and pastels, executed entirely by hand, other than drawings of heading 4906 and other than hand-painted or hand-decorated manufactured articles; collages and similar decorative plaques . If the said paintings as mentioned by the applicant answer the description of item mentioned in Heading 9701, then the goods will be covered under this Heading and will attract a rate of 12%. Paintings cannot be treated as used and therefore the applicant must pay GST of 12% on the sale value, if their goods answer the description of Heading 9701. Old Cars - HELD THAT - 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 No. 08/2018 CT (Rate) dated 25.01.2018 being satisfied by them. Old Jewellery - HELD THAT - The provisions of Rule 32(5) of CGST Rules are applicable to them in respect of old jewellery which are purchased by them. Antique jewellery of age exceeding 100 years - HELD THAT - Tariff item 9706 00 00 covers Antiques of an age exceeding 100 years . Antique jewellery of age exceeding 100 years will fall under this tariff item and will be liable to tax @ GST. The provisions of Rule 32(5) of CGST Rules will not be applicable to them in this case. Old watches - HELD THAT - Wrist watches, pocket-watches and other watches, including stop-watches, with case of precious metal or of metal clad with precious metal fall under Heading 9101 of the GST Tariff and Wrist watches, pocket-watches and other watches, including stop-watches, other than those of Heading 9101 fall under Heading 9102 of the said Tariff. The rate of GST is 18% and the same is applicable even to Old Watches, however with the benefit of the provisions of Rule 32(5) of CGST Rules i.e tax will be paid on the difference between sale price and purchase price considering such watches are second hand goods. Antique watches of age exceeding 100 years - HELD THAT - Tariff item 9706 00 00 covers Antiques of an age exceeding 100 years . Antique watches of age exceeding 100 years will fall under this Tariff item and will be liable to tax @ 12% GST. The provisions of Rule 32(5) of CGST Rules will not be applicable to them in this case. Collectibles - HELD THAT - The applicant has submitted that collectibles fall under Residuary Entry - Serial No. 453 of Schedule III - i.e. Goods which are not specified in Schedule I, Il, IV, V or VI. If the collectible is a watch then it will fall under the specific heading of watches. The Residual Entry mentioned above is only applicable to goods which are not specified in Schedule I, Il, IV, V or VI. The details of collectibles has not been mentioned by the applicant and in the absence of specifics the question cannot be answered. Collectibles (Books) - HELD THAT - 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. Antique Books - HELD THAT - 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 printed books, newspapers, pictures, etc, will fall under the various sub headings of Chapter 49 of the GST Tariff as the case may be. Since the specific details and description of collectibles (books) has not been mentioned by the applicant, in the absence of specifics the question cannot be answered. Collectibles/Memorabilia (Articles such as clothing, sporting equipment s, books, autographs, photographs and such other items) - HELD THAT - In absence Of specifics this question cannot be answered.
Issues Involved:
1. Whether the applicant is dealing in second-hand goods and if tax is to be paid on the difference between selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017. 2. Classification and HSN code of various goods listed and GST rates applicable to such goods. Issue-wise Detailed Analysis: 1. Dealing in Second-hand Goods and Tax Payment: The applicant, an auctioneer dealing in second-hand goods, sought clarity on tax liability under Rule 32(5) of CGST Rules, 2017. The rule states that the value of supply for second-hand goods should be the difference between the selling price and purchase price, provided no input tax credit has been availed. The judgment clarified that the applicant is indeed dealing in second-hand goods and must discharge tax liability based on the difference between selling and purchase prices for old cars, old jewelry, and old watches. This applies even if the goods are procured from unregistered persons where no GST is charged, and thus no input tax credit is availed. 2. Classification and HSN Code of Goods: (i) Paintings: Paintings bought from individual art collectors fall under Heading 9701, attracting a GST rate of 12% on the sale value. Paintings cannot be treated as used goods. (ii) Old Cars: Old cars fall under Heading 8703, generally attracting 28% GST. However, as per Notification No. 08/2018 CT (Rate) dated 25.01.2018, old cars attract a reduced rate of 18% if specific conditions are met. The provisions of Rule 32(5) of CGST Rules apply, subject to the conditions of the notification being satisfied. (iii) Old Jewellery: Old jewelry falls under Heading 7113, with the provisions of Rule 32(5) of CGST Rules applicable, meaning tax will be paid on the difference between sale and purchase prices. (iv) Antique Jewellery (Exceeding 100 Years): Antique jewelry exceeding 100 years falls under Tariff item 9706 00 00, attracting 12% GST. Rule 32(5) of CGST Rules does not apply in this case. (v) Old Watches: Old watches fall under Heading 9101/9102, attracting 18% GST. Rule 32(5) of CGST Rules applies, meaning tax will be on the difference between sale and purchase prices. (vi) Antique Watches (Exceeding 100 Years): Antique watches exceeding 100 years fall under Tariff item 9706 00 00, attracting 12% GST. Rule 32(5) of CGST Rules does not apply. (vii) Collectibles: The classification of collectibles depends on the specific item. For example, a bat signed by Sachin Tendulkar would fall under the residual entry (Serial No. 453 of Schedule III) if no specific HSN code applies. The intrinsic value of the collectible influences its classification. (viii) Collectibles (Books): Collectibles in the form of books fall under various sub-headings of Chapter 49 of the GST Tariff, depending on the specific nature of the book. The residual entry applies only if no specific HSN code is available. (ix) Antique Books: Antique books exceeding 100 years fall under Tariff item 9706 00 00, attracting 12% GST. If under 100 years, they are classified under the appropriate heading of Chapter 49. Conclusion: The judgment provided clarity on the tax treatment and classification of various second-hand and antique goods dealt with by the applicant. It emphasized the application of Rule 32(5) of CGST Rules for second-hand goods and specific HSN codes and GST rates for different categories of goods.
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