Pre- GST there was buzz that as per section 9(4) of the Central GST Act, 2017, jewellers also falls under the Reverse Charge Mechanism. Revenue Secretary Hasmukh Adhia’s, right before a day before press release 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.
The Department recently issued a press statement dated 13th July, 2017 clarified that though as per section 9(4), jewelers also comes under the RCM, however, it has to be read in conjunction with section 2(105) read with section 7 of the said Act. Section 2 (105) defines supplier as a person supplying the goods or services. Section 7 provides that a supply is a transaction, for a consideration by a person in the course or furtherance of business.
|A supplier is defined as the one who buys or sells in furtherance of his business.|
Let’s elaborate the above definition further:
If the transaction is between Unregistered Supplier & Registered Person, NO GST
Suppose Mr. ‘A’ is a customer (i.e. an unregistered suppler) comes to Mr. ‘B’, a jeweller (i.e. registered Person) for selling old jewellery, in this case Mr. ‘B’ does not falls under RCM. Even though the sale of old gold by an individual is for a consideration, but 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 jeweler will not be liable to pay tax under reverse charge mechanism on such purchases.
If the transaction is between Unregistered Supplier & Registered Supplier, FALLS UNDER RCM
Suppose Mr. ‘P’ (an unregistered supplier) comes to Mr. ‘Q’ (Registered supplier) for selling old jewellry, in this case Mr. ‘Q’ falls under RCM because the transaction is between unregistered supplier and registered supplier.
If the transaction is between Unregistered Supplier & Registered Person, then there will be no GST and if the transaction is between Unregistered Supplier & Registered Supplier, then it falls under RCM.
Hope this information will help you in your Professional endeavors. For further assistance/query, feel free to write to us.
Author: C S Ekta Maheshwari is the Author of this article and is Company Secretary by profession. The Author can be reached at [email protected]
The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.