In re Ramanujam Tulsi Ramadas (GST AAR Karnataka)
The applicant filed an advance ruling application under the CGST Act, 2017 and KGST Act, 2017 regarding the proposed business of purchasing second-hand cars from unregistered dealers, carrying out minor repairs, and selling them to unregistered customers. The applicant anticipated that their aggregate annual turnover would exceed ₹40 lakh and sought clarification on three issues: applicability of the margin scheme, classification and rate of tax, and valuation of supply.
The Authority admitted the application as it pertained to the applicability of notifications, determination of tax liability, and registration requirements under Section 97(2) of the CGST Act. However, the applicant did not provide any interpretation of law or detailed factual submissions. During multiple personal hearings, the applicant failed to furnish clarifications or supporting documents despite being specifically asked to provide information regarding ownership transfer, documentation, and accounting treatment of the vehicles.
The Authority examined the issue of whether GST could be discharged on a margin basis for second-hand car transactions. It observed that the term “margin scheme” is not defined under the CGST Act or rules. Nonetheless, based on the nature of the business, the applicant was considered to be dealing in second-hand goods. Referring to Section 2(52) of the CGST Act, the Authority held that motor vehicles qualify as “goods” since they are movable property.
