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If applicant purchases the second hand goods from other registered persons, then the applicant can claim the input tax credit on such purchases but he would become ineligible to apply marginal scheme for supplies of such second hand goods.

Input Tax Credit — The applicant has sought advance ruling in respect of the following question: a) Whether applicant dealing in second hand goods and tax is to be paid on the difference between the selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017 if dealer purchases used / second hand gold jewellery from individuals who are not dealers under the GST and at the time of sale there is no change in the form/ nature of goods? b) Whether ITC is allowed to be claimed if purchases are made from the dealer from whom marginal scheme if applicable? Held that— 1. In the case of applicant dealing in second hand goods and invoicing his supplies as “second hand goods”, the valuation of supply of second hand gold jewellery which are purchased from individuals who are not registered under GST and there is no change in the form and nature of such goods, can be made as prescribed under sub-rule (5) of Rule 32 of the Central Goods and Service Tax Rules. 2. In case the applicant purchases second hand jewellery from registered person, the applicant is eligible to claim input tax credit on such inward supplies but if he claims the input tax credit against such inward supplies he would not be eligible for the margin scheme of valuation as prescribed in sub-rule (5) of Rule 32 of the Central Goods and Services Tax Rules for the outward supplies of such second hand jewellery. — Attica Gold Pvt. Limited, In Re… [2020] 22 TAXLOK.COM 099 (AAR-Karnataka)