A day after the government said that sale of old gold jewellery will attract 3 per cent Goods and Services Tax (GST) via the reverse charge mechanism, it clarified that sale of old gold jewellery as well as old vehicles by ‘individuals’ will not attract any GST. However, if an unregistered supplier of gold ornaments sells it to a registered supplier, GST will be applicable under the reverse charge mechanism.
The government in an official statement said, “even though the sale of old gold by an individual is for a consideration, it cannot be said to be in the course or furtherance of his business (as selling old gold jewellery is not the business of the said individual), and hence does not qualify to be a supply per se.”
“Accordingly, the sale of old jewellery by an individual to a jeweller will not attract the provisions of Section 9(4) and jeweller will not be liable to pay tax under reverse charge mechanism (RCM) on such purchases,” it added.
Revenue department officials said the same principle will apply on sale of old cars or two-wheelers and no GST will be payable even though the supply would be for a consideration.
On Wednesday, during the GST Masterclass, Revenue Secretary Hasmukh Adhia in his reply to a question had said that purchase of old gold jewellery by a jeweller from a consumer will be subject to GST at the rate of 3 per cent under reverse charge mechanism, in line with the provisions contained in Section 9(4) of the Central GST (CGST) Act, 2017. As per Section 9(4) of the CGST Act, the tax on supply of taxable goods (gold in this case) by an unregistered supplier (an individual in this case) to a registered person (the jeweller in this case) will be paid by the registered person (the jeweller in this case) under reverse charge mechanism.
The Revenue Department, however, now clarified that the said section has to be read in conjunction with Section 2(105) read with Section 7 of the CGST Act. Section 2 (105) of CGST Act defines supplier as a person supplying the goods or services and Section 7 provides that a supply is a transaction for a consideration by a person in the course or furtherance of business.