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TMI Blog2024 (6) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... thus the nature of goods is changed - the items to be dealt with by the applicant do not qualify to be Second Hand Goods and therefore the applicant is not eligible to operate under the Margin Scheme in term of Rule 32 (5) of Central Goods and Service Tax Rules, 2017. Since the items to be dealt with by the applicant do not qualify to be Second Hand Goods, the applicant is not eligible to operate under Margin Scheme in term of Rule 32 (5) of Central Goods and Service Tax Rules, 2017 read with corresponding provisions of SGST Rules, 2017. Whether the benefit of the Margin Scheme is available for intra-state or inter-state supply of goods? - HELD THAT:- Since it is established that the applicant is not eligible to operate under Margin Scheme in term of Rule 32 (5) of Central Goods and Service Tax Rules, 2017 read with corresponding provisions of SGST Rules, 2017 as the items to be dealt with by them do not qualify to be Second Hand Goods, the benefit is neither available for intra state supply of goods nor inter-state supply of goods. - MAHIPAL SINGH AND MAHESH KUMAR GOWLA, MEMBER Present for the Applicant : Mr Ashish Gwalani, C.A Note 1: Under Section 100 of the CGST/RGST Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aluminium Scrap, old used brass utensils and other scrap, used old steel utensils scrap, old used scrap of copper, used waste plastic bags used plastic PET bottles etc. qualify as second hand goods and thus covered under the Margin Scheme notified under Rule 32 (5) of the CGST Rules, 2017. 1. It is submitted that normally GST is charged on the transaction value of the goods. However, in respect of second hand goods, a person dealing in such goods is allowed to pay tax on the margin i.e. the difference between the value at which the goods are supplied and the price at which the goods are purchased. If there is no margin, no GST is charged for such supply. The purpose of the scheme is to avoid double taxation as the goods, having once borne the incidence of tax, re-enter the supply and the economic supply chain. 2. Rule 32 (5) CGST Rules, 2017 specifies 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ap, used old steel utensils scrap, old used scrap of copper, used waste plastic bags used plastic PET bottles etc. qualify as second hand goods in as much as these goods are 'used goods as such'. Further, the Applicant does not avail Input Tax Credit on such used Iron Scrap, used Lead Acid Batteries old used Aluminium utensils other Aluminium Scrap, old used brass utensils and other scrap, used old steel utensils scrap, old used scrap of copper, used waste plastic bags use plastic PET bottles etc. 6. In this regard, reference may also be placed on the Press Release dated 15 July, of the GST Council wherein it has been clarified as under in respect of old and used bottles: Doubts have been raised regarding the applicability of the margin scheme under GST for dealers in second hand goods in general and for dealers in old and used empty bottles in particular. Rule 32 (5) of the Central Goods and Services Tax 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 and where no input tax credit has been availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2017, for carrying out the provisions specified in Section 20 of the Integrated Goods and Service Tax Act, 2017 shall, so far as may be, apply in relation to integrated tax as they apply in case of central tax. Section 20 of the IGST Act prescribes that the provisions of the CGST Act shall mutatis mutandis apply to various subjects which have been provided under Section 20. The subject pertaining to 'time and value of supply' is also covered under Section 20, hence the rules made under CGST Act in relation to valuation of a supply is applicable to IGST Act as well. 2. Therefore, Rule 32 (5) of the CGST Rules, 2017 which provides for Margin Scheme in case of intra-state supplies shall also be applicable in case of inter-state supplies. Therefore, the Applicant is of the view that they are entitled to make inter-state supplies of old used Iron Scrap, used Lead Acid Batteries old used Aluminium utensils other Aluminium Scrap, used old steel utensils scrap old used scrap of copper used waste plastic bags, used plastic PET bottles while operating under the Margin Scheme. C. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT:- Q.1. When the Applicant is operating under the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Iron Scrap, used Lead Acid Batteries old used Aluminium utensils other Aluminium Scrap, used old Steel utensils scrap old used scrap of copper, old used Brass utensils and other scrap, used waste plastic bags used plastic PET bottles etc. To manufacturers whether the goods when sold outside the state or when sold within the state of Rajasthan qualifies under the Margin Scheme. Considering application of dealer and as per dealer profile, dealer collects scrap items from URD (Unregistered Dealers) and supply these items to manufacturers. Commodities on which applicability of Margin Scheme sought 1. Lead Acid Batteries 2. Iron Scrap 3. Aluminium utensils 4. Steel utensils scrap 5. scrap of copper 6. Brass utensils and other scrap 7. waste plastic bags used plastic PET bottles In this regard the relevant extract of Section 32 (5) of the CGST Rules, 2017 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by five percentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession. 5) Though the definition of second hand goods is not prescribed in GST but as per the common trade parlance, the definition of same is as under- Second hand goods means any new or used property that has been sold, traded, exchanged, consigned or otherwise disposed of by its original owner. 6) The applicant is dealing with used Iron Scrap, used Lead Acid Batteries old used Aluminium utensils other Aluminium Scrap, used old ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Lead Acid Batteries, old used Aluminium utensils other Aluminium Scrap, old used brass utensils and other scrap, used old steel utensils scrap, old used scrap of copper, used waste plastic bags used plastic PET bottles etc to manufacturers whether such thus covered under the Margin Scheme notified under Rule 32 (5) of the CGST Rules, 2017? Ans- The applicant is not covered under the Margin Scheme notified under Rule 32 (5) of the CGST Rules, 2017. Q.2. When the applicant is operating under the Margin Scheme notified under Rule 32 (5) of the Central Goods and Service Tax Rules, 2017 (CGST Rules, 2017) by selling used Iron Scrap, used Lead Acid Batteries old used Aluminium utensils other Aluminium Scrap, old used brass utensils and other scrap, used old steel utensils scrap, old used scrap of copper, used waste plastic bags used plastic PET bottles etc. to manufacturers whether the goods when sold outside the state or when sold within the state of Rajasthan qualifies under the Margin Scheme. Ans - The benefit of Margin Scheme notified under Rule 32 (5) of the CGST Rules, 2017 is not available to applicant neither for intra state supply of goods nor inter-state supply of goods. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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