GST AAR: Exchange of Silverscrap for finished ornaments Supply

The Authority for Advance Ruling (AAR), Tamil Nadu, issued an order on 9th May 2025 to M/s. PSB Traders, legal name Paaragiri Balaraman Nagarajeswaran based in Salem, Tamil Nadu. This order was issued under Section 9(4) of both the CGST Act and TNGST Act, 2017. The applicant is involved in the making of silver products by the use of raw materials like silver and copper which comes in different purities and affect the value of the final items.

Any appeal should be filed within 30 days with the Tamil Nadu State Appellate Authority for Advance Ruling as per the ruling. The ruling will apply only to the applicant and the related tax officers, as long as the facts, rules or situation do not change. If the ruling was obtained by hiding facts or giving wrong information, it will be treated as void. Also, the CGST Act and the TNGST Act are treated the same for all relevant provisions unless mentioned otherwise.

The applicant asked nine questions. The first one was whether the barter exchange applies to B2B transactions without money. The ruling confirmed that such exchanges including trading silver scrap for finished ornaments are considered “supply” under the GST and these are taxable. The second question asked was whether Reverse Charge Mechanism (RCM) applies when job work is done by unregistered individuals. As this job work doesn’t attract RCM in this case, the question was not answered.

For the third question about using discreet packaging while showing the legal name on shipping labels and the fourth question is about securing goods for a lower value, no ruling was given as these do not come under the GST provisions. The fifth question was about HSN codes for the silver scrap products. The authority provided the codes as follows:- Silver Scrap and Melted Scrap Bars – 7112, Melted Silver Rods and Melted ‘Kacha’ (imperfect silver) – 7106.

The sixth question asked if E-way bills are required for buying and selling silver scrap, ornaments or silver fine. The ruling stated that E-way bills are not compulsory for these items in both the intra-state and inter-state movements. The seventh question related to the need for E-way bills for goods moved under delivery challans for job work, repair or support in approval. It was cleared that E-way bills are not needed for these movements of silver goods.

The last two questions was how to prove value for products of different purities and whether job workers can be paid in materials instead of sales were not answered. The authority said these questions do not come under the relevant GST sections.