Important Keyword: Notification No. 04/2017 Compensation Cess, GST second-hand goods exemption, Compensation cess second-hand goods, Rule 32(5) CGST Rules, Used goods GST valuation, Second-hand goods dealer GST, Compensation cess exemption, GST margin scheme, Used car dealer GST, GST reverse charge second-hand goods,
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Table of Contents
[F.No.354/136/2017-TRU]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
New Delhi, the 20th July, 2017
Notification No. 04/2017- Compensation Cess (Rate): Seeks to exempt intra-State supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods and who pays the goods and services tax compensation cess on the value of outward supply of such second hand goods, as determined under sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules, 2017, from any supplier, who is not registered, from the whole of the goods and services tax compensation cess leviable thereon under section 8 of the Goods and Services Tax (Compensation to States) Act, read with sub-section (4) of Section 9 of the Central Goods and Services Tax Act
GST: [TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY]
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Goods and Services Tax (Compensation to States) Act, 2017 ( 15 of 2017), read with sub- section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council,
hereby exempts intra-State supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods and who pays the goods and services tax compensation cess on the value of outward supply of such second hand goods as determined under sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules, 2017, from any supplier, who is not registered, from the whole of the goods and services tax compensation cess leviable thereon under section 8 of the Goods and Services Tax (Compensation to States) Act, read with sub-section (4) of Section 9 of the Central Goods and Services Tax Act.
(Ruchi Bisht)
Under Secretary to the
Government of India
📚 Frequently Asked Questions (FAQs): Notification No. 04/2017 - Compensation Cess (Rate)
Q1. What is Notification No. 04/2017 - Compensation Cess (Rate)?
Answer: It grants exemption from Compensation Cess on specified purchases of second-hand goods from unregistered suppliers.
The exemption is available to eligible registered second-hand goods dealers who comply with Rule 32(5) valuation provisions.
Q2. Who can claim this exemption?
Answer: Registered persons engaged in buying and selling second-hand goods.
The exemption is not available to every GST-registered business.
Q3. Does the supplier need to be unregistered?
Answer: Yes.
The notification specifically applies where the supplier is not registered under GST.
Q4. What type of supplies are covered?
Answer: Intra-State supplies of second-hand goods.
The notification specifically refers to such transactions.
Q5. Is the exemption available for all second-hand goods?
Answer: Not automatically.
All conditions prescribed in the notification must be satisfied.
Q6. Why is Rule 32(5) important?
Answer: Rule 32(5) provides the valuation mechanism for second-hand goods dealers.
The exemption is linked directly to this valuation method.
Q7. Does this mean outward sales are exempt?
Answer: No.
The notification concerns inward supplies received from unregistered suppliers.
Outward sales may still attract GST and Compensation Cess as applicable.
Q8. What is the purpose of the exemption?
Answer: To avoid additional Compensation Cess burden and reduce cascading taxation.
It supports the smooth functioning of the second-hand goods market.
Q9. Does the exemption eliminate GST?
Answer: No.
The notification deals specifically with Compensation Cess and does not create a blanket GST exemption.
Q10. Can used car dealers benefit?
Answer: Yes.
Used vehicle dealers are among the most common beneficiaries when the specified conditions are fulfilled.
Q11. Which legal provisions are connected to this exemption?
Answer: Section 11 of the Compensation to States Act, Section 11 of the CGST Act, Section 8 of the Compensation Act, Section 9(4) of the CGST Act, and Rule 32(5) of the CGST Rules.
Q12. Is documentation important?
Answer: Absolutely.
Dealers should maintain records proving supplier status, purchase details, and valuation methodology.
Download PDF: Notification No. 04/2017 - Compensation Cess (Rate)
More Information: https://taxinformation.cbic.gov.in/
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