AAR; No GST On The Difference Between Purchasing, Selling Price Of Second Hand Gold Jwellery

The Karnataka Authority of Advance Ruling, AAR in the case observed and has ruled that purchasing of second-hand gold which being in the form of jewellery and also the parts of jewellery from unregistered individuals and from selling it to be registered or to the unregistered dealers after meeting it in the form of lumps of gold, the same cannot be subject to GST on the margin difference which being between the sale price and purchase price as it is stipulated under Rule 32(5) of the CGST Rules, 2017.

The bench comprising of M.P. Ravi Prasad and Kiran Reddy T. in the case observed and has held that the HSN code for old gold jewellery being 7113, and after melting the same into gold lumps or the irregular shapes of gold, thus, the HSN code being 7108.
Therefore, the applicant being in the business of purchasing and selling the used goods i.e., the second-hand goods. Therefore, they purchased the used of old gold jewellery which being from the unregistered persons and also sell it to others after cleaning it and polishing it. Thus, the applicant melts the unsold old used jewellery or the parts that remain unsold because of outdated design or model or because they are excessively damaged beyond repair and they did not even charge GST on the purchase of this old jewellery or the parts. Thus, the Central Tax (Rate) dated 28.06.2017 and pay the GST on outward supplies as per Rule 32(5) as stipulated in the Notification. The applicant in the case does not have any input or these purchases.
Further, the applicant in the case seek an advance ruling which being on the basis of weather an applicant purchasing second-hand gold in the form of jewellery or parts of jewellery has to pay GST on the margin difference between the sale price and purchase price as it is stipulated under Rule 32(5) of the CGST Rules, 2017.
It has also been held by the AAR in the case that when the applicant melts the gold jewellery into gold lumps, thus, the nature of the goods changes as much as the characteristics of the articles and the classification and since the processing in the case is being done by the applicant wherein it changes the nature of the goods, thus, it is not being specified by them the condition and hence are not eligible to avail of the benefits of Rule 32(5) of the CGST Rules, 2017.
White Gold Bullion Private Limited: the name of the Applicant.