Court :
AAR, Kerala
Brief :
The AAR, Kerala, in the matter of M/s Best Money Gold Jewellery Ltd. [Advance Ruling No. KER/06/2023 dated March 02, 2023] ruled that value of gold will not diminish even if it is exchanged among 10 different users in a span of 2 years as a jewellery piece of 22 carats remains 22 carats even after changing hands. Thus, the term ‘second hand’ does not hold any meaning when it comes to items such as gold, land, currency. Accordingly, the assessee would not be eligible to value gold ornaments as per Rule 32(5) of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules").
Citation :
Advance Ruling No. KER/06/2023 dated March 02, 2023
The AAR, Kerala, in the matter of M/s Best Money Gold Jewellery Ltd. [Advance Ruling No. KER/06/2023 dated March 02, 2023] ruled that value of gold will not diminish even if it is exchanged among 10 different users in a span of 2 years as a jewellery piece of 22 carats remains 22 carats even after changing hands. Thus, the term ‘second hand’ does not hold any meaning when it comes to items such as gold, land, currency. Accordingly, the assessee would not be eligible to value gold ornaments as per Rule 32(5) of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules").
M/s. Best Money Gold Jewelry Ltd ("the Applicant") is engaged in the business of buying and selling of old/second-hand gold jewellery from unregistered persons and make minor processing changes in the form of cleaning and polishing and sells them to other customers.
The Applicant submitted that since the jewellery was purchased from unregistered person and therefore, there was no scope for availment of the ITC as per Section 16 of the Central Goods and Services Tax Act, 2017 ("the CGST Act").
The Applicant filed an application for advance ruling before the AAR, Kerela seeking whether the Applicant qualifies to pay GST only on the difference between the selling price and purchase price as stipulated under Rule 32(5) of the CGST Rules.
Whether the Applicant qualifies to pay GST only on the differential amount between the selling price and purchase price of second hand gold jewellery being equivalent to trading of second hand goods?
The AAR, Kerala, in Advance Ruling No. KER/06/2023 ruled as under:
"Determination of Value of Supply:
32 (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 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."
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