Sales of secondhand or used paintings are subject to GST
Fact and Issue of the case
The fact of the case are the applicant purchases and sells second hand or used Painting . No ITC is being availed on the purchase of such Paintings. Therefore Rule 32(5) of CGST & MSGST Rule, 2017 is applicable to sale of such paintings and tax shall be paid by the applicant on the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored.
According to applicant, Schedule II Entry No. 236 Chapter heading 9701 covers “Paintings’ drawings and pastels, executed entirely by hand, other than drawings of heading 4906 and other than hand-painted or hand-decorated manufactured articles, collages and similar decorative plaques”. Therefore, the second hand or used ‘Paintings) sold by the applicant will attract tax at the rate specified by Schedule II-Entry No. 236 Chapter Heading 9701.
Observation of the court
The court has gone through the facts of the matter , documents on record and submission made by the applicant.The applicant has submitted that they purchase and sell second hand or used ‘Painting’ and do not avail ITC on the purchases of such ‘Paintings’. Therefore, according to the applicant, the provisions of CGST & MSGST Rule, 2017 are applicable to sale of such ‘Paintings’ and tax shall be difference between the selling price and the purchase price and where the value of such supply is negative , it shall be ignored.
In an earlier case decided by this Authority on an application filed by Ws Astaguru Auction House private limited , this office vide Order No. GST-ARA.40/2020-21/B-27 dated 08.03.2022 has held that paintings are classifiable under Heading 9701 and the applicant was liable to pay CST of 12%. In the said case also, as in the present case, the applicant was dealing amongst other goods, in second hand paintings and it was also held that t!ie provisions of Rule 32 (5) of the CGST Rules were applicable to the applicant in respect of second hand goods.
Court has no reason to deviate from the said ruling since in the instant case also the applicant is dealing only in second hard paintings i.e. applicant is buying second hand paintings and selling the same on their website to the highest bidder .:,nd no input tax credit is being availed on the purchases of such ‘Paintings’, therefore the Provisions of Rule 32(5) of CGST Rules will be applicable in the instant case also.
Question 1:- Classification of second hand or used Paintings’ [Section 97(2) (a)]
Answer :- The Paintings are classifiable under Heading 9701 of the G5T Tariff.
Question 2:- Whether for determination of the liability to pay tax on the sale of second hand or used paintings , the applicant can apply Rule 32(5) of CGST& IVIGST Rules , 2017?
Answer :- Answered in the affirmative. The provisions of Rule 32(5) of CGST Rules will be applicable to applicant in respect of second hand .In-re-Saffron-Art-Private-Limited-GST-AAR-Maharashtra-2