Shambhu Traders (P.) Ltd. – 2019 (23) G.S.T.L. 293 (A.A.R. – GST – Rajasthan) 

Valuation can be made under margin scheme where ITC is not availed on purchase of second-hand goods.

Facts: In this case, the Applicant is engaged in business of selling used lead acid batteries to various manufacturers. Applicant purchases these used lead acid batteries from unregistered suppliers maybe located in same State as dealers or even a different State and subsequently sells them to various manufacturers and charges GST on difference between sale price and purchase price of lead acid batteries in accordance with rule 32(5) of CGST Rules.

Held: It was held in this case that because for goods to qualify as second-hand goods as per Rule 32(5) of the CGST Rules, 2017 such goods need be

   (1) used goods as such or goods after minor processing that does not change the nature of goods

   (2) goods on which no Input Tax Credit has been availed.

It is observed that used lead acid batteries are used goods and no processing is done on such goods. Therefore, these used lead acid batteries qualify as second-hand goods, further, the applicant does not avail Input Tax Credit on such used lead acid batteries. Therefore, it is found that, the used lead acid batteries qualify to be second-hand goods. Accordingly, the Applicant dealer is entitled to operate under the Margin Scheme in respect of the used lead acid batteries


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