E-Way Applicability for Movement of Gold, Silver & Precious Stones in Karnataka

E-Way applicability for movement of gold, silver, precious stones etc. within the State of Karnataka and between Other States

On the recommendation of the GST Council, the Government of Karnataka has issued a notification No. 4-C/2023 on 30th Of September 2023 which mandate the issue of E-way bill for the movement of gold, silver, precious stones etc. within the state (Karnataka).

This notification was issued based on the mandate given by the Notification No. 38/2023- Central Tax dated August 04, 2023, inserted rule 138F to the CGST Rules 2017 for the intra-State movement of gold, silver, precious stones, etc. [The goods specified against serial numbers 4 and 5 in the Annexure appended to sub-rule (14) of rule 138].

The notification issued by the State of Karnataka raises many doubts in the minds of traders and manufacturers of gold Jewellery in Karnataka and also the person involved in the business from other states as well.

All B2B sellers of gold, silver, precious stones etc. within the State of Karnataka are applicable for E-Way Bill compliances if their single sale is for a value of Rs. 2 Lakhs and above? What is the applicability of E-way Bill for sale to B2C customers that involves movement of gold, silver, precious stones etc. for a value of Rs. 2 Lakhs and above? What is the applicability E-way Bill in case of inter-state movement of gold, silver, precious stones etc. to and from Karnataka? The value of Rs. 2lakhs and above mentioned in this notification is the Taxable Value or Invoice Value? Before addressing these queries let’s understand the definition of intra-state supply and Place of Supply.

Intra-state supply of goods [Section 8 of IGST Act 2017]

Subject to provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same state / UT the same is treated as intra-state supply.

Place of Supply of goods? [Section 10 of IGST Act 2017]

(1) The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as:

a) Where supply involves movement of goods, whether by supplier / recipient / any other person, the PoS of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient.

b) Where the goods are delivered by the supplier to a recipient or to any other person on the direction of 3rd person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person

c) Where supply does not involve movement of goods, the PoS shall be the location of such goods at the time of the delivery to the recipient.

ca) Where supply is made to a person other than a registered person, the PoS shall, notwithstanding anything contrary contained in clause (a) or clause (c), be the location as per the address of the said person recorded in the invoice issued in respect of the said supply and the location of the supplier where the address of the said person is not recorded in the invoice.

Explanation.—For the purposes of this clause, recording of the name of the State of the said person in the invoice shall be deemed to be the recording of the address of the said person.

d) Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;

e) Where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board.

(2) Where the place of supply of goods cannot be determined, the place of supply shall be determined in such manner as may be prescribed.

On careful reading of the notification No. 4-C/2023 issued by Government of Karnataka on 30th Of September 2023, we can understand that the E-way Bill must be generated for the intra-state (Within Karnataka) movement of gold, silver, precious stones etc. by every registered person in following instances before the commencement of such movement takes place:

1. All supply that causes movement of gold, silver, precious stones etc. for a value of Rs. 2Lakhs and above [Eg. (1) All B2B sales/purchase (2) All B2C sales where the place of delivery specified in the invoice is the place other than the place of business of the supplier or the actual delivery of such goods are made by the registered supplier to a place other than the place of his place of business].

2. Any movement of gold, silver, precious stones etc. for a value of Rs. 2Lakhs and above for a reason other than supply [Eg. All kind of stock transfer within the state, Issue & receipt of goods for approval purpose, issues & receipt to/from job worker etc.]

3. Any inward supply of gold, silver, precious stones etc. for a value of Rs. 2Lakhs and above from an unregistered person [Eg. B2C purchases, Receipt of goods on approval basis from unregistered parties, receipt from job worker etc.]

FAQ:

a) Both Part A and Part B of E-way Bill is to be furnished before movement of gold, silver, precious stones etc. from shop / production unit / other Place of business (Within Karnataka)?

A:- Only Part A of E-way Bill (EWB-01) needs to be furnished, Part B not required.[Rule 138F(2)]

b) The consignment value fixed for issuing E-way Bill is Rs. 2Lakhs or above. Is this the Taxable Value?

A:- No. It is not only the taxable value as defined u/s 15 of CGST Act. It includes IGST, CGST, SGST & UTGST as applicable charged in the document used for the consignment [Whether it is Tax Invoice or Delivery Challan, if IGST, CGST, SGST / UTGST specified in the document the same needs to be considered for the calculation of Rs. 2Lakhs limit]

c) Is it mandatory to generate E-way bill if the distance of the movement of gold, silver, precious stones etc. is less than 50 km (Within Karnataka)?

A:- Yes.

d) Is it required to generate E-way Bill when the gold, silver, precious stones etc. are transferred through Courier agencies or E-commerce operators (Within Karnataka)?

A:- Yes [Proviso to Rule 138F(1)]

e) E-Way Bill is to be generated for all B2B sales in Karnataka?

A:- As per notification No. 4-C/2023 on 30th Of September 2023 issued by the State of Karnataka, only intra-state supply or delivery of gold, silver, precious stones etc. are subject to E-way Bill applicability. In case of B2B intra-state sales, when the delivery of goods terminates at any place other than the place of business of the supplier the E-way Bill is required. In other words, E-way Bill is required to be generated for all intra-state B2B sales for a value of Rs. 2Lakh or more as both the seller and purchaser are registered and either of them causes movement of such goods.

f) E-Way Bill is to be generated for all B2C intra-state sales in Karnataka?

A:- If the registered supplier causes intra-state movement of gold, silver, precious stones etc. then the B2C sales with a value of Rs. 2Lakh or more requires E-way Bill. In other words, if the place of delivery is specified in the invoice is the place other than the place of business of the supplier, then E-way Bill is required. In case the movement of ornaments are undertaken by the B2C customer themself, no requirement of E-way Bill will arise, but the supplier need to ensure the place of delivery mentioned in the invoice is the place of the business of the supplier so that the supplier can preclude from the responsibility of movement of goods.

g) Is it required to generate E-way Bill for Purchase of gold, silver, precious stones etc.?

A:- E-way Bill provisions are made applicable to all inward supplies for every registered person who causes the movement of goods, whether the movement of goods is the purchase or any other inward delivery, whether receipt is from registered or unregistered person subject to the limit specified of Rs. 2lakhs and above.

h) What are the documents required to be accompanied when the gold, silver, precious stones etc. are moved from supplier’s place of business?

A:- In case of Supply (1) The Tax Invoice (2) E-way Bill subject to Sect. 138F [Rule 55(3)], a copy of the e-waybill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance.

In case of reason other than supply – (1) Delivery Challan is mandatory (Rule 55(1) (c) with name & address of the consignee and the Place of Supply (2) E-way Bill subject to Sect. 138F [Rule 55(3)], a copy of the e-waybill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance (3) Invoice Book (Circular 10/10/2017 dated 18/10/2017) for the cases E-invoicing not applicable.

i) Is it required to generate E-way Bill for inter-state transfer of gold, silver, precious stones etc. from/to Karnataka State?

A:- It is not required to generate E-way Bill for inter-state transfers as per Rule 138F of Karnataka Goods & Service Tax Rules 2017 and CGST Rules 2017. But the notification needs to give more clarity on many aspects as to whether E-way Bill is required to be generated for inter-state supply of gold ornaments from the State of Karnataka to Other States, say Kerala, when the supplier carries the goods to the premises of courier agency in Karnataka for the purpose of inter-state supply? The transportation of gold from the place of business of the supplier to the office of courier agency within Karnataka is actually an intra-state movement of goods caused by the registered supplier, though the supply is inter-state. Same way, collecting an inter-state purchase of gold ornaments from the office of courier agency in Karnataka state is also causes the intra-state movement of goods. In order to avoid the difficulty of proving the movement of goods as “intra-state or inter-state” it is advised to generate E-way Bill for all kind of inter-state movement from / to the state of Karnataka when the value of consignment exceeds Rs. 2lakhs or above.

Note: The opinion suggested above is purely based on our humble understanding of the notification and probable scenarios envisaged in the jewellery business. We however await more clarity on the scenarios discussed above.