9911796707
TMI Blog2019 (6) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess of Applicant is as under: (i) Intending seller and Applicant sign an 'on approval contract wherein intending seller agrees to sell his goods to the applicant on approval basis at mutually agreed price. (ii) On receipt of goods on approval and being satisfied with quality and authenticity of the goods, Applicant uploads the details of goods for online auction. (iii) The goods remain in the possession of Applicant during the mutually agreed period of approval. Applicant has right to retain or return the goods during the approval period. Either approval is granted by Applicant within 6 months from the date on which it receives the said goods and purchases the same at mutually agreed price or returns the said goods to the intending seller. (iv) After conveying the approval and confirming purchase of goods, Applicant sells the goods to buyer in auction. (v) Applicant attracts buyers for the auction in the following manner: a. It maintains a list of buyers who have previously interacted and/or purchased any goods from the Applicant by participating in the auction. Whenever the Applicant organizes any auction, it sends an invitation to all such buyers inviting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3% on sale value (HSN code: 7113) Old Jewellery 3% on sale value (HSN code: 7113) 3% on difference between sale price and purchase price considering jewellery as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN Code: 7113) Antique Jewellery of an age exceeding one hundred years 12% on sale value (HSN Code: 9706) or 12% on difference between sale price and purchase price considering jewellery as second hand goods as provided under Rule 32(5) of CGST Rule. (HSN Code: 9706) 3% on sale value (HSN Code: 7113) or 3% on difference between sale price and purchase price considering jewellery as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN Code:7113) Watches: New Watches 18% on sale value (HSN Code: 9101/9102) 18% on sale value (HSN Code: 9101/9102) Old Watches 18% on sale value (HSN Code: 9101/9102) 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: 9101/9102) 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 betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Applicant seeks advance ruling in respect of determination of classification, valuation and GST rates applicable to following goods dealt with by it: Particulars Alternative 1 Alternative 2 Paintings: Bought from individual art collectors 12% on sale value HSN Code: 9701) 12% on difference between sale price and purchase price considering painting as second hand goods as provided under Rule 32(5) of CGST Rule (HSN Code: 9701) Cars: Old cars 18% on sale value (HSN Code: 8703) Based on Notification No. 08/2018 dated 25.01.2018 18% on difference between sale price and purchase price considering car as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN Code: 8703) Jewellery: Old Jewellery 3% on sale value (HSN code: 7113) 3% on difference between sale price and purchase price considering jewellery as second hand goods as provided under Rule 32(5) of CGST Rules. (HSN Code: 7113) Antique Jewellery of an age exceeding one hundred years 12% on sale value (HSN Code: 9706) or 12% on difference between sale price and purchase price considering jewellery as second hand goods as provided under Rule 32(5) of CGST Rule. (HSN Code: 9706) 3% on sale value (H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n difference between sale price and purchase price treating watches as second hand goods as provided under Rule 32(5) of CGST Rules. STATEMENT CONTAINING THE APPLICANTS INTERPRETATION OF LAW AND/OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTION(S) ON WHICH THE ADVANCE RULING IS SOUGHT SUBMISSIONS OF THE APPLICANT 1.1. Rule 32(5) of Central Goods and Service Tax Rules, 2017 ("CGST Rules") deals with determination of value of second hand goods. 1.2. 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. 1.3. The term "second hand goods" as per Rule 32(5) of CGST Rules would mean 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. 1.4. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reating it as separate class of goods falling under Residuary Entry - Serial No. 453 of Schedule III i.e. Goods which are not specified in Schedule I, Il, IV, V or VI? Relevant rate schedules are enclosed herewith at Annexure 1 b. Whether Applicant is entitled to value following goods in accordance with Rule 32(5) of Central Goods and Service Tax Rules, 2017 (hereinafter referred to as "CGST Rules") read with Section 15(5) of Central Goods and Service Tax Act (hereinafter referred to as "CGST Act"): i. Paintings bought from individual collectors and connoisseur ii. Old Cars, old jewellery and old watches iii. Antique jewellery, watches, books and other antique articles iv. Collectibles and Memorabilia Extract of relevant rule is enclosed herewith at Annexure 6. 4. The Applicant specifically clarifies that following are not subject matter of the present Advance ruling: a. New cars b. New jewellery c. New watches d. New books e. Paintings bought from Painter (artist) or other art dealers f. Any other new goods (not used or second hand goods) The Applicant is presently paying and will continue to pay GST at applicable rate on full sale value on su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed at Annexure 3. C. Rule 3(a) of Customs Tariff Act, 1975 is relevant in Applicant's case. It provides that the heading providing most specific description shall be preferred to heading providing a more general description. The copy of relevant extract of Customs Tariff Act, 1975 is enclosed herewith at Annexure 4. d. Applicant humbly submits as under: i. The term "antique" is defined under section 2 (1)(a) of Antiquities and Art Treasures Act, 1972 as any article, Object or thing which has been existence for not less than one hundred years. The extract of relevant definition is enclosed herewith at Annexure 5. Since there is a specific entry for "Antiques of an age exceeding one hundred years" in the rate schedule prescribed by Notification 1/2017 Central Tax(Rate), the same should prevail over general entries prescribing HSN code and rates for jewellery, watches, books and other items sold as antiques. ii. Since there is no specific entry for collectibles and memorabilia in rate schedules as specified by Notification No. 1/2017- Central Tax (Rate), HSN code and rate applicable to specific goods (sold as collectibles and memorabilia) should be applied. The same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been owned by someone else (Collins Dictionary) ii. having had a previous owner; not new (English Oxford Dictionary) iii. not new; having been used in the past by someone else (Cambridge English Dictionary) iv. acquired after being used by another (Merriam Webster) v. previously used or owned (Dictionary.com) Used Goods: i. already owned or put to a purpose by someone else; not new (Cambridge Dictionary) ii. that has endured use (Merriam Webster) d. Your good office will appreciate that as an auction dealer our main business is to sell "personal effects" such as jewellery, cars, watches, paintings, antiques, collectibles and memorabilia, etc. Most of these are articles used by the original owners or persons selling such goods to Applicant. The antiques, collectibles and memorabilia by very nature is old and used items. Applicant is not carrying out any processes on such goods before selling it. e. Applicant sells the goods [listed in point 3(b) of Facts and Background], which have been used by the seller or the earlier owners of such goods. Applicant does not perform any process on such goods, which changes the nature of such goods. Applicant does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods in an auction. The goods sold by applicant form part of the secondary market, as these goods have already been purchased from the primary market. B. Classification issue: Applicant has made detailed submissions on classification of all goods dealt by it in written submission filed in the course of personal hearing. The applicant reiterates following submissions in case of collectible and memorabilia: i. Collectibles and memorabilia generally includes article like clothing, sport equipment, books, autographs, photographs, music instruments, idols, footwear, furniture, utensils, etc. ii. There is no specific classification, HSN code or entry for collectibles and memorabilia in rate schedules as specified by Notification No. 11//2017- Central Tax (Rate). Therefore, HSN code and rate applicable to specific goods sold i.e. clothing, sport equipment, books, autographs, photographs, music instruments, idols, footwear, furniture, utensils, etc. should be applied. C. Applicant primarily deals in second hand or used goods and hence Rule 32(5) of CGST Rules, 2017 applies to goods dealt by it: i. Please refer to Para no. 3 of Applicants submissions (handed over during pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l effects) mainly from individuals not registered under GST. Sellers of such goods (being not liable to GST) do not charge tax on goods sold by them to second hand goods dealer. In absence of any tax charged, the question of availing input tax credit by dealer (applicant in given case) does not arise. In such case, dealer has not taken any credit of tax and hence Rule 32(5) clearly and squarely applies on sale of such goods. One may tend to take a view that Rule 32(5) applies only to sale of goods, which are purchased on payment of GST and where credit of such tax is not availed. This interpretation will make Rule 32(5) redundant in majority of transactions as such second hand or used goods are normally purchased from individuals not liable to tax as such goods are not sold by them in course of business. If this interpretation is taken, most of the dealers in second hand goods will not be entitled to take valuation as prescribed under Rule 32(5) of the CGST Rules. This will defeat the purpose of legislation. Moreover, the second hand goods when it is purchased for the first time from primary market it would suffer the levy of indirect tax i.e. excise, VAT, GST, etc. It therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ministration. Once such valuation scheme is on the statue book, it is mandatory for assessee as well as tax authorities to follow it in letter and sprit, irrespective of revenue considerations. Once the goods are second hand or used goods, Rule 32(5) is applicable irrespective of value of such goods and irrespective of nature of such goods. D. Sale of second hand or used cars by applicant: Notification No. 8/2018 - Central Tax (Rate) dated 25.01.2018 prescribes the rate of tax applicable on old and used cars. The copy of relevant notification is enclosed herewith. The said notification clearly lays down that the rate of tax specified, shall be calculated on the value that represents margin of the supply of such goods. This is de hors of Rule 32(5) of CGST Rules, 2017. E. Submission of sample invoices and relevant documents: Applicant is not dealing in standard goods. Applicant gets variety of second hand or used articles for sale ranging from antiques, memorabilia or collectibles, paintings, sculptures, art pieces, books, watches, clocks, utensils, so on and so forth. Applicant deals in the numerous items that vary from each other. Advance ruling is sought for class of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dealing primarily into used personal effects such as jewellery, antiques, watches, paintings, collectibles and memorabilia, etc. The Applicant has sought advance ruling on following two issues. 5.1 Rate of tax:- a) Antique jewellery - whether classifiable under HSN Code 9706 attracting 12% GST or HSN Code 7113 attracting 3% GST? The GST is applicable at the rate of12% on sale value (HSN Code: 9706). b) Antique Watch - whether classifiable under HSN Code 9706 attracting 12% GST or HSN Code 9101/9102 attracting GST? The GST is applicable at the rate of 12% on sale value (HSN Code: 9706). c) Antique Book - whether classifiable under HSN Code 9706 attracting 12% GST or HSN Code 4901 attracting 0% GST? The GST is applicable at the rate of on sale value (HSN Code: 9706). These rates of tax applicable only when the goods are Antique. d) Collectibles and Memorabilia - whether classifiable under relevant HSN Code attracting GST at applicable rate of the goods sold as memorabilia or treating it as separate class of goods falling under Residuary Entry - Serial No. 453 of Schedule III i.e. Goods which are not specified in Schedule I, II, IV, V or VI? The terms col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... li, Advocate appeared and requested for admission of application as per contentions made in their application. Jurisdictional Officer Sh. V. V. Kulkarni, Dy. Commissioner of S.T. (E-626, LTU-1, Mumbai also appeared. The application was admitted and called for final hearing on 10.01.2019. Sh. Naresh Seth, C.A., Sh. Sidhanth Shetty, V P Operation, and Ms. Dipali, Advocate appeared and argued as per submissions. Jurisdictional Officer Sh. V. V. Kulkarni, Dy. Commissioner of S.T. (E-626, LTU-I, Mumbai appeared and made written submissions. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made by both, the applicant as well as the jurisdictional office. Keeping the submissions made by the applicant that they are only raising their questions in respect of second hand or used goods, and the submissions made by the jurisdictional office in mind we now deal with each of the questions raised by the applicant. Q.No. 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? The submissions made by the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly. Q.No. 1:- The classification and HSN code of goods listed in table given in "Issues for Determination" and GST rates applicable to such goods. We take up the issue of classification in respect of the goods as under:- (i) Paintings bought from individual art collectors:- 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. (ii) Old Cars:- The applicant has submitted that the cars that they deal in fall under C.H. 8703 of the GST Tariff. All the Heading 8703 attracts 28% GST except tariff item 870310 10 (electrically operated vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariff. Heading 7113 covers 'Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal. The provisions of Rule 32(5) of CGST Rules are applicable to them in respect of old jewellery which are purchased by them. (iv) Antique jewellery of age exceeding 100 years:- 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. (v) Old watches:- 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. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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):- In absence Of specifics this question cannot be answered. With respect to the example given by the applicant with respect to sale, in auction, of a bat signed by Sachin Tendulkar, we have to state that in such a case it is not only the bat that is sold. The intrinsic value of a legendary sportsperson like Sachin Tendulkar also comes into play in this case for example, the specific cricket bat would be costing say, anywhere between ₹ 1,000/- to ₹ 10, 000/- but probably will be auctioned off at a price of maybe even Rs. One lakh. Thus in such cases The Residual Entry under HSN Code: Residuary Entry - Serial No. 453 of Schedule Ill will come into play. Hence the tax will be charged accordingly. Further in these types of cases it cannot be said that the goods are sold as second-hand or used goods and therefore the provisions of Rule 32(5) of CGST Rules will not be applicable to them in this case. 05. In view of the extensive deliberations as h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, with case of precious metal or of metal clad with precious metal 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 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 as second hand goods. (vi) Antique watches of age exceeding 100 years:- Antique watches of age exceeding 100 years will fall under Tariff item 9706 00 00 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. (vii) Collectibles:- In view Of the discussions above the question cannot be answered. (viii) Collectibles (Books):- 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 will only applicable to goods which are not specified in Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
