Traders of second-hand gold ornaments not eligible for GST margin scheme

Last updated: 26 July 2023

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The Kerala Authority for Advance Ruling (AAR) has determined that traders dealing in second-hand gold ornaments are not eligible to use the Goods and Services Tax (GST) margin scheme. The ruling clarifies that gold, due to its inherent value not diminishing with use, does not qualify as 'second-hand goods' for the purpose of this scheme. Therefore, GST on such transactions must be calculated based on the full transaction value, not just the profit margin.

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

Daily Limit Reached