9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (5) TMI 747 - AAR - GSTLiability to pay GST on the margin difference between the sale price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017 - applicant purchasing second hand gold in the form of jewellery / parts of jewellery, from unregistered individuals and sells to registered / unregistered dealers, after melting the same, in the form of lumps / irregular shapes of gold, without changing the nature, (i.e.,) Gold remains gold - HSN Code for Old Gold Jewellery purchased and after melting the purchased old gold jewellery is 7113 or not? HELD THAT - In the instant case, the applicant is purchasing second hand gold in the form of jewellery from unregistered individuals and supplies to registered / unregistered persons in the form of lumps after melting the same. One of the conditions to apply rule 32(5) for their outward supplies is that supply made by the supplier must be a taxable supply. The applicant is into supply of gold, which is a taxable supply and hence the first condition is satisfied. Classification of gold jewellery and gold lumps - HELD THAT - The tariff heading 7113 pertains to jewellery and parts thereof of precious metal which includes gold jewellery, and tariff heading 7108 pertains to gold in unwrought or semi-manufactured forms such as gold lumps or irregular shapes of gold. Gold jewellery are a distinct category of article having distinct characteristics and is not same as gold lumps. When the applicant melts the gold jewellery into gold lumps, the nature of goods changes in as much as the characteristics of the articles and the classification changes. Since the processing done by the applicant changes the nature of goods, they are not eligible to avail the benefits of Rule 32(5) of CGST Rules, 2017. The HSN Code for Old Gold Jewellery is 7113 and after melting into gold lumps or irregular shapes of gold the HSN Code is 7108.
Issues Involved:
1. Applicability of GST on the margin difference between the sale price and purchase price for second-hand gold. 2. Classification of HSN Code for old gold jewellery and gold lumps after melting. Summary: Issue 1: Applicability of GST on Margin Difference The applicant, a company engaged in the purchase and sale of used gold, sought an advance ruling on whether GST should be paid on the margin difference between the sale price and purchase price of second-hand gold jewellery, as per Rule 32(5) of CGST Rules, 2017. The applicant argued that they meet the conditions stipulated in Rule 32(5) since they deal in second-hand goods, perform minor processing without changing the nature of the goods, and do not claim input tax credit on purchases. They cited various legal precedents to support their stance that melting gold jewellery into lumps does not change its nature. Findings: The authority examined Rule 32(5) of CGST Rules, 2017, which allows the value of supply of second-hand goods to be the difference between the selling price and purchase price, provided certain conditions are met. These conditions include that the supply must be taxable, the supplier must deal in second-hand goods, and the nature of the goods must not change. The authority found that melting gold jewellery into lumps changes the nature of the goods, as gold jewellery and gold lumps are classified under different tariff headings (7113 for jewellery and 7108 for gold lumps). Therefore, the applicant does not satisfy the condition that the nature of the goods should not change, making them ineligible for the benefits of Rule 32(5). Ruling: The applicant cannot pay GST on the margin difference between the sale price and purchase price for second-hand gold jewellery after melting it into lumps, as stipulated in Rule 32(5) of CGST Rules, 2017. Issue 2: Classification of HSN Code The applicant sought clarification on the HSN Code for old gold jewellery and gold lumps after melting. Findings: The authority referred to the Custom Tariff Act, 1975, which classifies gold jewellery under tariff heading 7113 and gold lumps under tariff heading 7108. The classification changes when gold jewellery is melted into lumps, as they fall under different tariff headings. Ruling: The HSN Code for old gold jewellery is 7113, and after melting into gold lumps or irregular shapes, the HSN Code is 7108.
|
