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TMI Blog2021 (8) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... the act of supplying them is taxable, and at what stage, for each of the three categories of transactions undertaken by the applicant? ii. If the answer to the above question is in the affirmative, what would be the rate of tax at which this would be taxable, i.e. which category would this be taxed under? 3. Admissibility of the application: The question is about "whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term" and hence is admissible under Section 97(2)(g) of the CGST Act 2017. 4. BRIEF FACTS OF THE CASE: The applicant furnishes some facts relevant to the issue: 4.1 The applicant is mainly involved in the business of providing Marketing Services. The nature of services provided to each customer depends on the requirement and depends on the tailored agreement with each customer. 4.2 During the course of business the applicant receives orders for supply of e-vouchers wherein the applicant sources e-vouchers for such customers as per the order received and acts as an intermediary for buying and supplying of e-vouchers. 4.3 Types of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply shall be,- (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases. (5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall,- (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the tax is paid. 5.3 Vouchers are instruments which are redeemable at their face value for goods or services supplied by either the issuer of the vouchers itself, or another party. As such there exists an obligation to accept them as full or partial consideration for a supply of goods or services or both, as per the CGST Act, 2017. Such instruments which enable payments to be effected between a payer and a beneficiary are governed by the Payment and Settlement Systems Act, 2007 (hereinafter referred to as "the Act"). 5.4 Vouchers, or Pre-Paid Instruments (PPIs) are classified into three categories as per the Act and the Master Directions issued by the RBI: closed system, semi-closed system and open syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged" is considered, then the act of supplying vouchers could be a service. The applicant states that since actionable claims are specifically considered supply of neither goods nor services by virtue of Schedule III, this activity by them would have to be fully exempt. 5.7 Money: 5.7.1 The applicant submits that under Section 2(75) of the CGST Act, "money" means Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value. Pursuant to this, the vouchers issued by them could also fall within the ambit of this definition. 5.7.2 The holder of the voucher redeems it for the purchase of goods or services. This is the taxable activity, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt consideration for a supply of goods or services or both, then such instruments would qualify as vouchers. The payment instruments, in the instant case, squarely would be covered under the definition of "vouchers" as there is an obligation for the acceptor to accept it as consideration or part consideration for a supply of goods or services or both. We have gone through the copy of the agreement entered into between the applicant and Amazon and the agreement between the applicant and HSBC and also Work Order issued by the applicant to HSBC respectively. We find that the applicant has entered into an agreement to provide marketing services to HSBC whereas in the agreement with M/s. Amazon, there is no specific work description for the applicant. We have also gone through the invoices issued to M/s. Milklane and M/s General Mills India Pvt Ltd. We note that the following are the terms and conditions mentioned in the invoices which also hold true for the beneficiaries of the vouchers:- 1. Under this promotion, the vouchers are being offered directly by Premier Sales Promotions Pvt. Ltd. Further General Mills India Private Limited is not responsible either directly or indirectly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANE DAIRY SERVICES PRIVATE LIMITED product packaging and these voucher codes will be integrated into Premier Sales Promotions Pvt. Ltd backend 4. This offer entitles the Participant cashback on their Online Wallet or Bank Account Or UPI. The Participant will be responsible for their choice of the cashback transfer method. 5. If the Participant is not a wallet partner registered customer, he/she will be required to register on the wallet partner website or Mobile App to receive the wallet cashback. 6. This offer entitles the Participant cashback on their Online Wallet or Bank Account Or UPI. The Participant will be responsible for their choice of the cashback transfer method. 7. If the Participant is not a wallet partner registered customer, he/she will be required to register on the wallet partner website or Mobile App to receive the wallet cashback. 8. Any disputes or differences in connection with the offer shall be governed by laws of India and shall be subject to the exclusive jurisdiction of the Courts at Bengaluru. 9. This Voucher entitles you to Rs. 10 Cashback on purchase of select MILKLANE DAIRY SERVICES PRIVATE LIMITED products in select cities of India. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d "Multiple Options Voucher" are semi closed PPIs. 11. Now we proceed to examine whether the impugned vouchers are covered under "money". In this regard, we invite reference to the definition of 'money' under Section 2(75) of the CGST Act 2017, which is as under:- (75) "money" means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value; The issue is whether the payment instrument dealt in by the applicant is covered under "any other instrument recognised by the Reserve Bank of India" and whether the condition "when used as a consideration to settle an obligation" is satisfied. 11.1 The payment instrument in scenario 10(b) and 10(c) (in respect of "Cash Back Voucher" and "Multiple Options Voucher") clearly cannot be issued by the issuer unless the Reserve Bank of India approves the same. Hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. We note that vouchers are not covered under "actionable claim" as they are not debt. They have an expiry period. We also rely on the decision of Hon hie Supreme Court of India, in the case of H. Anraj Etc vs Government Of Tamilnadu Etc on 4 October, 1985, where it held as under:- The two entitlements which arise on the purchase of a lottery ticket are of a different character, inasmuch as the right to participate arises in presenti, that is to say it is a choate or perfected right in the purchaser on the strength of which he can enforce the holding of the draw while the other is inchoate right which is to materializes in future as and when the draw takes place depending upon his being successful in such draw. Moreover, on the date of the purchase of the ticket, the entitlement to participate in the draw can be said to have been delivered unto-the- possession of the purchaser who would be enjoying It from the time he has purchased the ticket and as such it would be a chose in possessing while the other would be an actionable claim or a chose-in-action. Thus a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion & use and whether it can be transmitted, transferred, delivered, stored, possessed etc.. In the instant case the item "voucher" has all the aforesaid capabilities and hence it gets covered under goods, though it is intangible. Further, the Hon hie Supreme Court of India, in the case of Vikas Sales Corporation Vs. CCE (1996), with regard transfer of import licenses held that Import licenses are not actionable claims, they got a monitory value, they are freely transferable and hence they are goods. In the instant case the item "Voucher" is very much similar to "Import license". Thus the impugned vouchers get covered under goods. 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. We also observe that though both ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird party who has issued the voucher would consider them to provide deduction in the amount payable by the claimant. 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. 14.2 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. 14.3 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. 15. In view of the foregoing, we pass the following RULING i. Whether the vouchers themselves, or the act of supplying them is taxable, and at what stage, for each of the three categories of transactions undertaken by the applicant? Answer: The supply of Vouchers ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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