Page 203 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] IN RE : ATTICA GOLD PVT. LTD. 449
(2) ……..
(3) ……..
(4) ……..
(5) 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 :
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 default-
ing borrower reduced by five percentage points for every quarter or part
thereof, between the date of purchase and the date of disposal by the per-
son making such repossession.”
6.2 This rule stipulates the method of working of the taxable value of a
supply and is applicable if the following conditions are satisfied :
(a) the supply made by the supplier must be a taxable supply
(b) the supplier shall be a person dealing in buying and selling of se-
cond-hand goods that means
(i) used goods as such or after such 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.
6.3 In the instant case, the supplier, i.e. the applicant is effecting the
supply of second-hand jewellery which is taxable under the GST Act as it is cov-
ered under Entry No. 13 of Schedule V to the Notification No. 1/2017-Central
Tax (Rate), dated 28th June, 2017 which is taxable at 1.5% under the CGST Act
and similarly taxable under the KGST Act, 2017 also at 1.5%. Hence the supplier
satisfies the condition that the supply made by him must be a taxable supply.
6.4 Regarding the next condition, the supplier must be a person dealing
in buying and selling of second-hand goods. It is seen that the applicant has ad-
mitted that he is purchasing used gold jewellery from individuals and selling the
same, after cleaning and polishing them. He must not avail any input tax credit
on the purchase of such goods. The goods so purchased must be supplied as
such and if at all any process is involved, that must not change the nature of the
product. The applicant has stated that he is not melting the jewellery to convert it
into bullion and then remaking it to new jewellery but only cleaning the old jew-
ellery and polishing it without changing the nature and form of the jewellery so
purchased. These goods are then supplied to other persons. Further, he shall
have to invoice the goods as “second hand jewellery” to differentiate them from
the “first hand jewellery”. Hence it is clear that, subject to the condition of invoic-
ing them as “second hand jewellery”, the applicant satisfies the second condition
also.
6.5 In view of the applicant satisfying both the aforesaid conditions, the
valuation of the supply of second hand jewellery may be made as prescribed in
sub-rule (5) of Rule 32 of the Central Goods and Services Tax Rules, 2017.

GST LAW TIMES  21st May 2020  203