2022 (3) TMI 572 - AAR - GST

Classification of goods - HSN Code - rate of GST - Paintings Bought from individual art collectors - old cars - Old Jewellery - Antique Jewellery of an age exceeding one hundred years - Old Watches - Antique Watches of an age exceeding one hundred years - Antique Books - Whether Applicant dealing in second hand goods is required to pay tax on the difference between selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017? HELD THAT - The Appellate Authority observed that, they had to only decide the limited issue of the applicability of Rule 32(5) of the CGST Rules, 2017 - The Appellate Authority held that SAPL (Astaguru.com) was eligible to take the benefit of Rule 32(5) for the said products, viz. Paintings bought from individual art collectors, Antique Watches, Antique Jewellery and Antique Books. Paintings - HELD THAT - Paintings bought from individual art collectors will be classifiable under Heading 9701 and the applicant is liable to pay GST of 12%. Old Cars - HELD THAT - Motor Vehicles fall under Heading 8703 of the GST Tariff. All the items under 8703 will attract 28% GST except Tariff item 870310 10; Sub-heading 8703 80. However old cars will 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. Old Jewellery - HELD THAT - Articles of jewellery and parts thereof, of precious metal will fall under Heading 7113 of the GST Tariff attracting 3% GST. Antique jewellery - HELD THAT - 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 to tax @ 12% GST. Old Watches - HELD THAT - Wrist watches, pocket-watches and other watches, including stopwatches, with case of precious metal or of metal clad with precious metal will fall under CH 9101 of the GST Tariff and Wrist watches, pocket-watches and other watches, including stop-watches, other than those of Heading 9101 will fall under Heading 9102 of the said Tariff. The rate of GST is 18% and the same will be applicable even to Old Watches. Antique watches of age exceeding 100 years - HELD THAT - Antique watches of age exceeding 100 years will fall under Tariff item 9706 00 00 and will be liable to tax @ 12% GST. Antique Books - HELD THAT - Antique books would fall under HSN 9706 of the GST Tariff and would attract GST @ 12%. Whether Applicant dealing in second hand goods is required to pay tax on the difference between selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017? - HELD THAT - Answered in the affirmative in respect of the impugned goods. The provisions of Rule 32(5) of CGST Rules will be applicable to applicant in respect of second hand goods i.e used goods which are purchased by them and then sold.

Summary

Issues Involved:
1. Classification and HSN code of goods listed in the application and applicable GST rates.
2. Whether the applicant dealing in second-hand goods is required to pay tax on the difference between selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017.

Issue-wise Detailed Analysis:

1. Classification and HSN Code of Goods and Applicable GST Rates:

Paintings:
- Classification: Heading 9701
- GST Rate: 12%
- Valuation: 12% on the difference between sale price and purchase price, considering paintings as second-hand goods as per Rule 32(5) of CGST Rules.

Old Cars:
- Classification: Heading 8703
- GST Rate: 18% (lower rate as per Notification No. 08/2018 CT (Rate) dated 25.01.2018)
- Valuation: 18% on the difference between sale price and purchase price, considering cars as second-hand goods as per Rule 32(5) of CGST Rules.

Jewellery:
- Old Jewellery:
- Classification: Heading 7113
- GST Rate: 3%
- Valuation: 3% on the difference between sale price and purchase price, considering jewellery as second-hand goods as per Rule 32(5) of CGST Rules.
- Antique Jewellery (age exceeding 100 years):
- Classification: Heading 9706
- GST Rate: 12%
- Valuation: 12% on the difference between sale price and purchase price, considering jewellery as second-hand goods as per Rule 32(5) of CGST Rules.

Watches:
- Old Watches:
- Classification: Heading 9101/9102
- GST Rate: 18%
- Valuation: 18% on the difference between sale price and purchase price, considering watches as second-hand goods as per Rule 32(5) of CGST Rules.
- Antique Watches (age exceeding 100 years):
- Classification: Heading 9706
- GST Rate: 12%
- Valuation: 12% on the difference between sale price and purchase price, considering watches as second-hand goods as per Rule 32(5) of CGST Rules.

Books:
- Antique Books:
- Classification: Heading 9706
- GST Rate: 12%
- Valuation: 12% on the difference between sale price and purchase price, considering books as second-hand goods as per Rule 32(5) of CGST Rules.

2. Applicability of Rule 32(5) of CGST Rules, 2017:

The applicant, dealing in second-hand goods, is required to pay tax on the difference between the selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017. This rule applies to second-hand or used goods, 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 if the value is negative, it shall be ignored.

Conclusion:

The Advance Ruling Authority confirmed that the classifications and GST rates provided in the application are accurate. The applicant is liable to pay GST on the difference between the selling price and purchase price for second-hand goods, as per Rule 32(5) of CGST Rules, 2017. This ruling aligns with previous rulings for the erstwhile business entity, ensuring consistency in the application of tax laws.