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Applicability of notification No. 8/2018 -Central Tax (Rate) dated 25th January, 2018 is optional. If the appellant wishes to avail input tax credit on the components used in the refurbishment of the old and used car, they can very well avail the same without availing benefits of the said notification. However, if the benefit of the notification No. 8/2018 -Central Tax (Rate) dated 25th January, 2018 is to be availed, then the conditions for the same have to be followed.

Valuation of supply— Section 15 of CGST Act— The present appeal has been filed by the appellant against the Advance Ruling order.

Appellant is planning to start a business in the automobile industry, precisely related with purchase of old and used motor vehicles and then sale of these motor vehicles after refurbishment. The applicant is unregistered under GST at present.

Appellant submitted that they will be selling old and used refurbished car and will not claim any ITC, hence for the purpose of discharge of GST on its supply, it is covered by the provisions of Notification No. 8/2018-CT (Rate) dated 25-01-2018 wherein for the purpose of levy of tax, the value is determined as margin. As per the said notification, tax in excess of tax payable on the margin is exempt and according to an Explanation to the notification, the value that represents the margin of supplier shall be the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored.

Appellant has filed an application for Advance Ruling before the Authority for Advance Ruling in context of the aforesaid Explanation (ii) to understand for the purpose of valuation, whether the amount paid to the owner of the car and amount incurred for the refurbishment of the said car are includible in the purchase price so as to deduct the same from the selling price of the old and used refurbished car to arrive as the margin for the purpose of levy of GST under Notification No. 8/2018-CT (Rate) dated 25.01.2018.

Authority for Advance Rulings, Rajasthan has answered the question in negative an hold that from the plain reading of Explanation (ii) to the aforesaid Notification it is observed that the Explanation (ii) undoubtedly/clearly used the word “purchase price” not the “purchase cost” of goods. It means only the amount paid by the applicant that the time of purchase of used cars can be considered as “purchase price” there is no provision in the said notification to include the cost of refurbishment in the purchase price.

The appellant’s main thrust is that to calculate margin, purchase cost should be treated as purchase price.

Held that— From the plain reading of the explanation (ii) to the notification No. 8/2018 -Central Tax (Rate) dated 25th January, 2018, it is noticed that the explanation (ii) clearly used the word ‘purchase price’ not the ‘purchase cost’ of the goods. It means only the amount paid at the time of purchase of used and old cars can be considered as 'purchase price’ for the purpose of this notification.