Trader of second-hand gold in form of lumps or irregular shapes cannot avail GST chargeability under margin scheme

Last updated: 23 May 2023

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Quick Summary

A recent ruling by the Karnataka AAR states that businesses dealing in second-hand gold cannot use the GST margin scheme if they melt down gold jewellery into lumps or irregular shapes. The processing changes the nature of the goods, making them ineligible for the scheme which allows GST to be charged only on the profit margin. This means standard GST rules apply to these processed gold items.

Court :
AAR, Karnataka

Brief :
The AAR, Karnataka, in the matter of M/s. White Gold Bullion Pvt. Ltd.[Advance Ruling no. KAR ADRG 20/2023 dated May 15, 2023] ruled that purchasing second hand gold in the form of jewellery / parts of jewellery, from unregistered individuals and selling to registered / unregistered dealers, after melting in the form of lumps / irregular shapes of gold will not get benefit of chargeability of GST on the margin difference between the sale price and purchase price as stipulated in Rule 32(5) of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules").

Citation :
Advance Ruling no. KAR ADRG 20/2023 dated May 15, 2023

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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