M/s. White Gold Bullion Private Limited, a registered Private Limited Company in Bengaluru, has filed an application for Advance Ruling under the CGST Act and KGST Act. The company is engaged in the purchase and sale of used gold (second-hand goods). They have sought clarification on two questions:

1. Whether they need to pay GST on the margin difference between the sale price and purchase price of second-hand gold, which they purchase from unregistered individuals and sell to registered/unregistered dealers after melting it into lumps or irregular shapes without changing the nature of gold, as per Rule 32(5) of CGST Rules, 2017.

2. Whether the HSN Code for Old Gold Jewellery is 7113 and after melting it into lumps or irregular shapes, the HSN Code is 7108.

The application was found admissible under the provisions of the CGST Act, and a personal hearing was conducted. After considering the facts and arguments presented by the applicant, the following findings and discussions were made:

• Rule 32(5) of the CGST Rules, 2017 states that the value of supply of second-hand goods shall be the difference between the selling price and the purchase price if certain conditions are satisfied.
• The first condition, a taxable supply, is fulfilled as the supply of second-hand goods falls under the taxable category.
• However, the second condition, which requires the supplier to be dealing in buying and selling of second-hand goods without changing their nature, is not satisfied by the applicant.
• The applicant melts the gold jewellery into lumps or irregular shapes, which changes the nature of the goods and their classification under different tariff headings.
• Gold jewellery falls under tariff heading 7113, while gold lumps or irregular shapes fall under tariff heading 7108.
• Since the applicant changes the nature of the goods by melting them, they are not eligible to avail the benefits of Rule 32(5) of the CGST Rules, 2017.

Based on the findings, the ruling was provided as follows:

1. The applicant is not required to pay GST on the margin difference between the sale price and purchase price of second-hand gold as per Rule 32(5) of CGST Rules, 2017.
2. The HSN Code for Old Gold Jewellery is 7113, and after melting it into lumps or irregular shapes, the HSN Code is 7108.

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