In re Hitesh Gwalani (M/s Baba Supplier) (GST AAAR Rajasthan)
The Rajasthan Appellate Authority for Advance Ruling (GST AAAR) recently examined the case of In re Hitesh Gwalani (M/s Baba Supplier), addressing whether the appellant’s sale of used scrap materials would qualify under the Margin Scheme as defined in Rule 32(5) of the Central Goods and Service Tax Rules, 2017 (CGST Rules, 2017). This ruling underscores the distinction between second-hand goods and scrap in determining GST applicability and has implications for businesses dealing in similar materials.
Case Background and Questions Raised
The appellant, M/s Baba Supplier, approached the AAAR seeking clarification on two primary questions regarding the applicability of the Margin Scheme:
- Whether the sale of various used items—including iron scrap, used lead-acid batteries, old aluminum and brass utensils, and waste plastic—under the Margin Scheme qualifies as per Rule 32(5) of the CGST Rules.
- Whether these items qualify under the scheme when sold within or outside Rajasthan.
The initial Advance Ruling Authority (AAR) in Rajasthan held that these goods did not qualify for the Margin Scheme, as they did not meet the definition of “second-hand goods.” Instead, the items were deemed “scrap,” intended primarily for recycling or melting down for new products rather than immediate resale in their existing form.
