In re Hitesh Gwalani (GST AAR Rajasthan)
The case of Hitesh Gwalani, seeking an advance ruling under the GST Act, revolves around the applicability of the Margin Scheme specified under Rule 32(5) of the Central Goods and Service Tax (CGST) Rules, 2017. The applicant, engaged in the business of buying and selling various types of scrap materials like iron, lead acid batteries, aluminum utensils, steel utensils, copper, brass utensils, waste plastic bags, and plastic PET bottles, seeks clarification on whether these goods qualify as second-hand goods and are thus eligible for the Margin Scheme.
The applicant argues that since these items are used goods and no processing is done on them, they should be considered second-hand goods under Rule 32(5) of the CGST Rules, 2017. They cite a previous decision by the AAR (Rajasthan) in a similar case, where used lead acid batteries were considered second-hand goods eligible for the Margin Scheme. Additionally, they refer to a press release by the GST Council clarifying that the margin scheme is applicable to any registered person dealing in second-hand goods as per Rule 32(5) of the CGST Rules, 2017.
However, the jurisdictional officer disagrees, arguing that the items in question, although used, are essentially scrap materials and not second-hand goods. They contend that these items are not considered as commodities in any specific category but are rather raw materials in the supply chain, with no possibility of reuse. Therefore, the officer concludes that the Margin Scheme is not applicable to scrap items as proposed by the applicant.
