E-art auctions face 12% GST on price differential

MUMBAI: Second-hand goods — be it antique watches, books, jewellery or for that matter even paintings — fall within the ambit of the goods and services tax (GST). Recently, in the case of Saffron Art, which is also an online auctioneer, the Maharashtra bench of the GST-Authority for Advance Rulings (AAR) examined this issue in the context of second-hand paintings. In a ruling that favours the applicant, it held that GST at 12% will be payable on the differential price.
The auctioneer procured paintings on an approval basis from various parties, displayed them on its website and sold them by way of an online auction to the highest bidder. Currently, it was charging GST at 12% on the entire price for which the second-hand painting was sold.
Saffron Art sought a ruling to determine the classification of second-hand paintings under GST laws. Further, in its application to the AAR, it submitted that its suppliers have brought the second-hand paintings and then offered them to it for sale. As it was not claiming any input tax credit (ITC), it asked whether, for determining the liability to pay tax arising on sale, could it apply rule 32 (5) for GST? In other words, it sought a ruling on whether there would be a GST levy only on the difference between the selling price and the purchase price.
The AAR bench held that second-hand paintings are classifiable under heading 9701 attracting a 12% rate. It also held that GST shall be paid on the difference between the selling price and the purchase price. If this figure is negative, the GST charge shall be ignored.


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