Para No.14. We note that, for question No. l, the AAR, Rajasthan held that the appellant are not covered under the Margin Schenw notified under Rule 32(5) of the CGST Rules, of 2017 . The AAR, Rajasthan observed that though the definition of second hand goods is not prescribed under GST but as per the conunon trade parlance, the definition of sanne is as under-
“Second hand goods means any new or or used property that has been sold, traded, exchanged, consigned or otherwise disposed of by its original owner”
14.1 – Further The AAR. Rajasthan observed that the applicant is dealing with used Iron Scrap. used Lead Acid Batteries old used Aluminium utensils & other Aluminium Scrap. used old Steel utensils scrap & old used scrap of copper, old used Brass utensils and other scrap, used waste plastic bags & used plastic PET bottles, therefore it cannot be covered under the definition of Second Hand Goods as basically these itetns can be tertned as scrap which are to be constilned/lneltecl for tuanufactutQ of new Itenm and thus the nature of goods is changed.
14.2 – Further the AAR, Rajasthan also mentioned that the Central Government has issued Notification No.8 2018 (Central Rate) dated in respect of Margin Scheme. under Rule 32(5) of CGST Act,2017. The AAR concluded that benefit of Margin Scheme is available only with respect to Motor Vehicles only where as the items to be dealt with by the applicant such as used Iron Scrap, used old Steel utensils scrap & old used scrap of copper, old used Brass utensils and other scrap. used waste plastic bags& used plastic PET bottles are different fronl Motor Vehicles.
14.3 – Thus the AAR, Rajasthan held that the items to be dealt with by the applicant do not qualify to be Second Hand Goods and therefore the applicant is not eligible to operate under the Margin Scheme in term of Rule 32(5) of Central Goods and Service Ta.x Rules, 2017 read with corresponding provisions of SGST Rules, 2017.
14.4 – For the second ruling sought by the applicant, the AAR Rajasthan held that it is established that the applicant is not eligible to operate under Margin Scheme m term of Rule 32(5) of Central Goods and Service Tax Rules, 2017 read with conesponding provisions of SGST Rules, 2017 as the items to be dealt with by them do not qualify to be Second Hand Goods, the benefit is neither available for intra state supply of goods nor inter-state supply of goods
Para No.19. As regards their contention that they purchase goods from original owner who are unregistered and sell them to manufacturers without any process and their goods qualify as second hand goods is not tenable for the reasons discussed as below:
We note that the appellant mentioned in the appeal that they proposed to initiate the business of selling of various types of second-hand goods to various manufacturers such as
In light of the appellant’s intent to acquire goods from unregistered suppliers and subsequently supply these goods to various manufacturers, it becomes apparent that the goods in question are either unusable or intended for recycling as scrap. The recycling of metal scrap and used materials is a crucial aspect of sustainable manufacturing and environmental conservation. Metal scraps from various sources, while not usable in their original form, provide valuable raw material for manufacturers when recycled. This process conserves natural resources and reduces the carbon footprint associated with mining and processing new metals. Similarly, used metal utensils, plastic bags, and bottles, which have reached the end of their life cycle as consumer products are not discarded as waste but are collected and processed to reclaim the materials they contain.
As already stated the reference to second hand goods in the margin money scheme is to such goods whose pre & post sale/disposal usage remains the same. For instance a second hand car shall be used in the same way as a new car. Used jewellery shall be worn the same way as new jewellery. Thus mere change of ownership is not sufficient to bring the term them as second hand goods & under the purview of Rule 32(5) of the CGST Rules, 2017. There is one more requirement i.e. continuity of usage. The judgement & references relied upon the appellant conform to the above test. However, the items which are subject matter of the Ruling do not qualify the test.
In view of the above, we hold that the items in question fall within the realm of scrap not second hand goods, rendering them ineligible to operate under the margin scheme as per Rule 32(5) of the CGST Rules, 2017, in so far as the goods are considered scrap.
Para No. 22.
1 ) We hold that selling of old used iron scrap, used lead acid batteries, old used Aluminium utensils & other Aluminium Scrap, old & used brass utensils and other scrap, used old steel utensils scrap, old used scrap of copper, used waste plastic bags & used plastic PET bottles etc are not covered under the Margin Scheme notified under Rule 32(5) of the CGST Rules, 2017.
2) We also hold that since the appellant is not eligible to operate under margin scheme in term of Rule 32(5) of the CGST Rules, 2017 with corresponding provisions of SGST Rules, 2017 as the goods are not qualified as second hand goods, thus, the benefit is neither available for intra state supply of goods nor interstate supply of goods.
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