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2021 (8) TMI 350 - AAR - GSTTaxability - stage of taxation - vouchers themselves, or the act of supplying them? - rate of tax to be charged - whether the impugned vouchers are covered under money ? - HELD THAT - It is clear that the applicant is supplying the payment instrument to various clients and they are not settling any obligation treating this as consideration. It is only at a later stage, some other person, viz. the client of the client (end user)) is using them to settle their obligation of payment of consideration, using the said vouchers instead of cash. Hence the payment instrument supplied by the applicant to their clients, cannot be covered under the definition of money at the time of supplying them. But they would take the colour of money only when it is used for payment of a consideration for the supply of goods or services procured by the end user. - Also, the applicant purchases the payment instruments and sells the same to their clients, who in turn distributes them to their clients/customers and the said customers use them to discharge their obligation to pay consideration for the goods or services procured by them from their suppliers. Hence these payment instruments would not obtain the character of money at the time of their supply by the applicant. Actionable claims are unsecured debts or it is a beneficial interest in a movable property which can be enforced by the civil courts. Further it is found that Insolvency and Bankruptcy Code 2016 defines Debt as a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. The vouchers are not covered under actionable claim as they are not debt. They have an expiry period - the entitlement of redemption is transferred or delivered unto the possession of the purchaser at the time of supply of vouchers by the applicant to its clients and therefore supply of vouchers by the applicant is not an actionable claim. Whether the impugned transaction of trading of vouchers amounts to supply in terms of Section 7(1) (a) of the CGST Act 2017 and if so whether the supply is of goods or services? - HELD THAT - In the instant case the applicant is involved in trading of vouchers, for a consideration in the course or furtherance of business. Thus the impugned transaction amounts to supply in terms of Section 7(1)(a) of the CGST Act 2017. Whether the impugned supply of vouchers amounts to supply of goods or services? - HELD THAT - The vouchers printed on paper are undoubtedly goods, as they are tangible - The product/item in the instant case i.e. voucher is undoubtedly a moveable property and squarely gets covered under intangible goods. Further Schedule II to Section 7 of the CGST Act 2017 stipulates the activities or transactions to be treated as supply of goods or supply of services. Para 1(a) of Schedule II to Section 7 specifies that any transfer of the title in goods is supply of goods. The transaction of sale of vouchers in the instant case involves transfer of the title and hence they are covered under goods. Though both electricity and computer software are intangibles, they are covered under Tariff heading 2716 and 8523 respectively - the e-vouchers are taxable as per residual entry no. 453 of third schedule of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 at the rate of 18% GST. Place of supply - HELD THAT - In the instant case neither the applicant nor their customer is aware of the transaction or the purpose for which the voucher would be redeemed. Hence the time of supply would be governed by the clause (a) of sub-Section (5) of Section 12 of the CGST Act - In case of Cash Back Vouchers, the applicant is not aware of the date of redemption and these vouchers are redeemed by way of cash back and are not identifiable with any particular goods/ services and hence the time of supply would be governed by the clause (a) of sub-Section (5) of Section 12 of the CGST Act - In the case of Multiple Option Vouchers, the applicant is not aware for what purpose and when the voucher would be redeemed, hence the time of supply would be governed by the clause (a) sub-Section (5) of Section 12 of the CGST Act.
Issues Involved:
1. Taxability of vouchers and the stage at which they are taxable for three categories of transactions. 2. Applicable rate of tax for the vouchers. Issue-wise Detailed Analysis: 1. Taxability of Vouchers and Stage of Taxability: The applicant, a Private Limited Company engaged in providing Marketing Services, sought an advance ruling on whether the supply of vouchers is taxable and the stage at which they become taxable for three categories of transactions: Gift Vouchers, Cash Back Vouchers, and Multiple Options Vouchers. a. Supply of Gift Vouchers: The applicant purchases vouchers from third parties (e.g., Amazon) and supplies them to customers (e.g., HSBC). These vouchers are then issued by the customers to their clients, who redeem them for goods or services from the issuing company. The transaction involves the applicant trading in vouchers, negotiating prices, and selling the vouchers to clients. b. Supply of Cash Back Vouchers: The applicant supplies vouchers to vendors, who distribute them to their customers. The customers redeem these vouchers for cashback in their e-wallets, which they use to purchase goods from the vendors. The redemption occurs when the cashback is credited to the e-wallet. c. Supply of Multiple Options Vouchers: The applicant supplies vouchers to vendors, who issue them to their customers. These vouchers can be used to pay for various goods or services from suppliers tied up with the applicant. The suppliers settle the vouchers with the applicant. The ruling determined that the supply of these vouchers constitutes a taxable supply of goods under Section 7(1)(a) of the CGST Act 2017. The vouchers, whether tangible or intangible, are considered goods as they are movable property capable of being transmitted, transferred, delivered, stored, and possessed. 2. Applicable Rate of Tax: The ruling examined whether the vouchers fall under the definition of "money" or "actionable claims." The definition of "money" under Section 2(75) of the CGST Act 2017 was considered, but it was concluded that the vouchers do not obtain the character of money at the time of their supply by the applicant. They are recognized as money only when used as consideration for the supply of goods or services by the end user. The vouchers were also examined under the definition of "actionable claims" under Section 2(1) of the CGST Act 2017 and Section 3 of the Transfer of Property Act, 1882. The ruling concluded that the vouchers do not qualify as actionable claims as they are not debts and have an expiry period. The ruling determined that the supply of vouchers is taxable as goods, and the applicable rate of tax is 18% GST as per Entry No. 453 of Schedule 3 of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. The face value of the vouchers is considered for the purpose of paying GST. Time of Supply: The time of supply for the vouchers is governed by Section 12(5) of the CGST Act 2017, which states: - The date of issue of the voucher if the supply is identifiable at that point. - The date of redemption of the voucher in all other cases. For all three categories of vouchers (Gift Vouchers, Cash Back Vouchers, and Multiple Options Vouchers), the time of supply is determined by the date of issue of the voucher, as the specific use and redemption date are not identifiable at the time of supply. Ruling: 1. The supply of vouchers is taxable as goods, and the time of supply for all three categories is governed by Section 12(5) of the CGST Act 2017. 2. The applicable rate of tax for the vouchers is 18% GST as per Entry No. 453 of Schedule 3 of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017.
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