Margin Scheme Benefit not Available for Melting Old Gold Jewellery into Irregular Gold Shapes: AAR

Case Details: Authority for Advance Rulings, Karnataka White Gold Bullion (P.) Ltd., In re - [2023] 151 taxmann.com 45 (AAR-KARNATAKA)

Judiciary and Counsel Details

• • Dr. M.P. Ravi Prasad & Kiran Reddy T., Member
  • V. Sudhindranath, Adv. for the Appellant.

Facts of the Case

The applicant was engaged in business of purchase and sale of used gold. It would purchase used old gold jewellery from unregistered persons and sell the same after melting it. It filed an application for advance ruling to determine whether it would be required to pay GST on margin difference between sale price and purchase price as stipulated in Rule 32(5) of Central Goods and Services Tax Rules, 2017.

AAR Held

The Authority for Advance Ruling noted that the applicant would purchase second hand gold in form of jewellery from unregistered individuals and it would supply to registered / unregistered persons in form of lumps after melting same. However, in the instant case, the applicant would melt gold jewellery into gold lumps and the nature of goods would change in as much as characteristics of articles.

Since, the processing done by applicant would changes nature of goods, the second condition prescribed under Rule 32(5) would not be satisfied. Therefore, it was held that the applicant would not be eligible to pay GST on margin difference between sale price and purchase price.