GST leviable only on difference between selling and purchase price of second hand jewellery: AAR Karnataka

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  • Last Updated on 20 July, 2021

GST on Second Hand Jewellery

Case details: Authority for Advance Rulings, Karnataka Aadhya Gold (P.) Ltd., In re - [2021] 128 254 (AAR - KARNATAKA)

Judiciary and Counsel Details

    • Dr. M.P. Ravi Prasad and Mashhood UR Rehman Farooqui | Member
    • Ms. Seetha Lakshmi | CA for the Applicant

Facts of the Case

The applicant was engaged in business of buying and selling of second hand gold jewellery. It filed an application for advance ruling to determine whether GST would be paid only on difference between selling price and purchase price of second hand gold jewellery. It submitted that it would sell the used/second hand gold jewellery which would be purchased from unregistered persons, ‘as such’, without making any further processing and there would be no input tax credit available.

AAR Held

The Authority for Advance Ruling observed that as per Rule 32(5) of CGST Rules, if a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used good 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.

In the instant case, the applicant has admitted that it is purchasing used gold jewellery from individuals and selling the same, after cleaning and polishing them. The applicant has also admitted that it is not availing any input tax credit on the purchase of such goods and the goods so purchased are supplied ‘as such’. The applicant has also 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 jewelry and polishing it without changing the nature and form of the jewellery so purchased. These goods are then supplied to other persons. Therefore, it was held that GST would be leviable only on difference between selling and purchase price of second hand jewellery.

Circulars and Notifications

  • Entry No. 13 of Schedule V to Notification No. 01/2017-Central Tax (Rate), dated 28-6-2017

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