Page 200 - GSTL_21st May 2020_Vol 36_Part 3

446 GST LAW TIMES [ Vol. 36
(b) Whether ITC is allowed to be claimed if purchases are made from
the dealer from whom marginal scheme if applicable?
3. The applicant furnishes some facts relevant to the stated activity :
(a) The applicant states that he is in the business of sale of used
(secondhand goods). He states that he is purchasing used gold jew-
ellery from unregistered persons and selling the same to others.
(b) The applicant states that as per Rule 32(5) of the CGST Rules, 2017,
if a person engaged in supply of second hand goods, he can avail
the benefit of marginal scheme as per Notification No. 10/2017-
Central Tax (Rate), dated 28-6-2017 under GST provided that he
shall satisfy all the conditions prescribed in the above said rule.
(c) The applicant states that Rule 32(5) of the CGST Rules, 2017 pro-
vides valuation for taxable supply by a person dealing in buying
and selling of second-hand goods. In such case, value of supply
shall be the difference between selling price minus purchase price.
To opt for the said valuation, conditions are required to be met are :
(i) Used goods are sold as such; or after minor processing which
does not change the nature of the goods; and
(ii) Where no input tax credit has been availed on the purchase
of such goods.
If under the margin scheme, difference between selling price minus
purchase price is negative, then GST is not applicable on such trans-
action.
(d) The applicant states that this issue is already heard in the case of
Safset Agencies Private Limited by the Maharashtra Advance Ruling
Authority [Order No. GST-ARA-86/2018-19B Mumbai, dated 15-1-
2019] [2019 (26) G.S.T.L. 351 (A.A.R. - GST)] where the dealer who
deal in old jewellery and that jewellery falls under Heading 7113 of
the GST Tariff, which covers Articles of jewellery and parts thereof,
of precious metal or of metal clad with precious metal. The provi-
sions of Rule 32(5) if CGST Rules are applicable to them in respect
of old jewellery which are purchased by them. It is clarified that he
can avail the benefit of Margin Scheme.
(e) The applicant states that his contention is that he is also engaged in
sale of second hand goods having GST Tariff 7113, he can also avail
the benefit of Margin Scheme under GST.
(f) The applicant explains that Rule 32(5) of the CGST Rules, 2017 pro-
vides 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 val-
ue of such supply is negative, it shall be ignored.
(g) A person dealing in second hand goods is allowed to pay the tax on
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
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