E-Art Auctions Are Entitled To A 12% GST
Second-hand products, such as antique watches, literature, jewelry, and even artworks, are subject to the goods and services tax (GST). The Maharashtra court of the GST-Authority for Advance Rulings (AAR) recently considered this problem in the context of second-hand paintings in the case of Saffron Art, which is also an online auctioneer.
12% would be charged on the price difference
In a decision that favored the petitioner, it was determined that GST at the rate of 12% would be charged on the price difference.
The auctioneer obtained artworks on an approved basis from various sources, presented them on its website, and sold them to the highest bidder in an online auction. It was now charging a 12 percent GST on the total price of the second-hand painting.
Saffron Art requested a judgment on the categorization of used artworks
Saffron Art requested a judgment on the categorization of used artworks under GST regulations. Furthermore, in its application to the AAR, it stated that its suppliers delivered the used artworks and subsequently offered them for sale to it.
Because it was not claiming any input tax credit (ITC), it inquired if it could utilize rule 32 (5) for GST to determine its responsibility to pay tax on sales. In other words, it wanted to know if there would be a GST duty just on the difference between the selling and purchasing prices.
The AAR bench determined that second-hand paintings are classifiable under topic 9701 and are subject to a 12% duty. It further said that GST must be paid on the difference between the selling and purchasing prices. If this amount is negative, the GST charge is not applied.