9911796707
TMI BlogAnalysing the Judgement of Hon’ble Bombay HC holding meal vouchers as ‘Goods’ & ImplicationsX X X X Extracts X X X X X X X X Extracts X X X X ..... Analysing the Judgement of Hon’ble Bombay HC holding meal vouchers as ‘Goods’ & Implications - By: - CA.Ankit Gulgulia - Value Added Tax - VAT and CST - Dated:- 27-5-2015 - - Recently the Hon ble High Court of Bombay have pronounced an order which is a land mark judgment for Indian E-commerce Industry specifically and including Coupon / voucher sub-industry considering the vacuum of judicial pronouncements on this aspect. The matter relates to CWP No. 5653 of 2010 7503 of 2013 decided on 20 th March, 2015 in case of M/s Sodexo SVC India Private Limited vs. The State of Maharasthra others[2015 (5) TMI 777 - BOMBAY HIGH COURT] in Hon ble Bombay HC where the basic issue required to be addressed by the court was, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Key Issue to be decided by Hon ble HC - Whether the Sodexo meal vouchers are goods for the purpose of levy of Octroi and Local Body Taxes (LBT)? Facts of the Case The Arrangement M/s Sodexo SVC India Private Limited (hereinafter referred to as Petitioner / Sodexo ) is engaged in conducting a business of providing pre printed Sodexo Meal Vouchers ( Vouchers ). Sodexo enters into a contract with its customers for issuing the said vouchers (Say ₹ 100/- face value). The customers in turn distribute the said vouchers to their employees who are the actual users of the said vouchers. It is stated that Sodexo has contracts with various affiliates such as restaurants, departmental stores, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hops, etc. Under the affiliate contracts, the affiliates are required to provide food and other items on presentation of the said vouchers by the users. The affiliates are bound to honour vouchers once presented by the users. The affiliates after receiving the said vouchers, present the same to Sodexo. On receipt of the vouchers, Sodexo reimburses the affiliates after deducting service charges (say ₹ 15/-). To operate such a model of paper based voucher, Sodexo had obtained certificate of authorization from the Reserve Bank of India under Section 7 of the Payment and Settlement Systems Act, 2007 to operate a payment system for issue of meal and gift vouchers in the form of 'paper based vouchers' and 'smart meal cards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; with effect from 25th June 2009. The Issues Whether the Sodexo Meal Vouchers are goods for the purposes of levy of Octroi and LBT ? Whether a Municipal Corporation constituted under the Maharashtra Municipal Corporations Act, 1949 is entitled to levy and/or collect Octroi or Local Body Tax (LBT) on Sodexo Meal Vouchers in accordance with the provisions of the Maharashtra Municipal Corporations Act,1949 and the Rules framed thereunder? Petitioner s Contention The said vouchers are nothing but payment instructions or payment instruments issued under a payment system operated under the said Act of 2007 as per the authorization received from the Reserve Bank of India. Under both the Octroi Rules and the LBT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, the taxes can be collected on the goods. Incidentally, since the octroi and LBT legislation does not throw light on definition of Goods inference can be drawn on the other provisions of the Act i.e. Octroi or LBT can be levied on the consumption, use or sale of goods within the limits of Municipal Corporations. The said vouchers are a medium to acquire any article for consumption, use or sale and the said vouchers are not capable of consumption, use or sale by themselves. Simply to say that the said vouchers are only medium of payment. Vouchers are similar to Lottery tickets which held not be goods by relying on Sunrise Associates v. NCT of Delhi 2006 (4) TMI 118 - SUPREME COURT of INDIA Vouchers are similar to paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and files in possession of a legal practioner by relying on R.D. Saxena v. Balram Prasad Sharma 2000 (8) TMI 1001 - SUPREME COURT OF INDIA He placed reliance on State Bank of India v. Neela Ashok Naik and Another AIR 2000 Bom. (151) wherein fixed deposit receipts were held to be goods on their characteristic of being capable to be sold, purchased or consumed, but the said vouchers do not possess any such charactersictic. He also relied on other judgements viz Bharat Sanchar Nigam Ltd. and Another v. Union of India and Others 2006 (3) TMI 1 - Supreme court TATA Consultancy Services v. State of Andhra Pradesh 2004 (11) TMI 11 - Supreme Court for laying down the characteristics of goods and justifying as to said vouche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs do not stand as goods within the prescribed characteristics. Revenue s Contention Revenue simply relied upon on the thesis that said vouchers were capable of use and/or consumption as well as sale within the limits of the Municipal Corporations. In support of above, revenue relied upon a decision of the Division Bench in the case of Maharashtra Chamber of Commerce Industries Agriculture Others v. State of Maharashtra [2003 (7) TMI 685 - BOMBAY HIGH COURT] and Small Scale Interpreneurs Association and Others v. State of Maharashtra and Others [ 2010 (7) TMI 957 - BOMBAY HIGH COURT ] Key Judicial Lay-downs The said vouchers are capable of being sold by the Petitioner after they are brought i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto the limits of the City. In fact, going by the scheme narrated above, the said vouchers are sold by the petitioner to its customers for value. Relying on Tata Consultancy services (supra) , court pointed that (Para 81) Citing the examples of several instances viz lottery tickets, Fixed deposit receipts and electromagnetic waves held that such printed paper vouchers are in the nature of goods and are not in the nature of actionable claim. The said voucher cannot be equated with lottery ticket or electromagnetic waves. How this Judgement opens up Pandora Box? The judgment was limited only to determine the applicability of LBT and/or Octroi in respect of sale of Sodexo Meal Vouchers within the local municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. Such judgment, though has left open the issue of whether such meal vouchers would qualify as 'goods' for other Acts as well. Is it that the test laid out in TCS s (Supra) and other cases referred to above conclusive to identify whether a particular item to be goods? If such vouchers are held to be goods, will the redemption of such voucher tantamount to barter transaction? Can this judgement have implications on coupons, gift cards and gift vouchers remains a point to ponder? A lot many issues which arise because of this judgment remains unanswered and requires due consideration Paper based voucher is similar to cases of cash cards used by several malls and retail outlets which create virtual currency on the card ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against which items can be purchased from retail outlets, does this sought of virtual currency also qualify to be goods ?. Before Parting.. The decision of Hon ble HC in the above case can lead to wide implications and the ones which might to un conductive to the trade and potentially lead to double taxation with ancillary implications. Industry though shall push the caution button to ensure that the mitigation strategy shall be duly implemented. Further, one may absurdly even see advance payment (as similar to said voucher) as Goods by applying this ratio laid down! DISCLAIMER: This paper is provided purely for your information only and you should check other information sources before taking any action based on any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the content in this paper. Neither the authors nor website hosting the paper make any warranty as to the quality or currency of the information contained in any of the site's articles. This paper is meant for informational purpose only and does not purport to be advice or opinion, legal or otherwise, whatsoever. Author does not intend to advertise its services through this update. Author or its associates are not responsible for any error or omission in this update or for any action taken based on its contents. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
