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TMI Blog2024 (7) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... ? - HELD THAT:- As per Sl. No. 6 of Schedule III of the CGST Act, actionable claims other than lottery, betting and gambling as being neither a supply of goods nor a supply of services. Therefore, only lottery, betting and gambling shall be treated as actionable claims which are goods under GST. All other actionable claims shall not be treated as either goods or services. In the case of Premier Sales Promotion Pvt. Ltd. [ 2023 (2) TMI 130 - KARNATAKA HIGH COURT ], the Hon'ble High Court in Para 10 Assessee receives orders for supply of e-vouchers wherein the assessee observed that sources e-vouchers for such clients as per the orders received and acts as an intermediary between the assessee and the supplier of e-vouchers However, in the present case, as per the facts stated , the Applicant purchases the vouchers, holds in its stock, and sells it to its clients and not acting as intermediary - purchase of these vouchers are not merely advance payment because the Applicant supplies these at a profit; and its client is also getting credit of more than what it has paid. In the present case, as per the given illustration, the client has paid Rs. 96/- but it gets the benefit of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y purchase the vouchers by making an advance payment and in bulk at Rs. 95 per voucher. Further, these vouchers are sold to clients for Rs. 96 each. Thus, the profit of Rs. 1 per voucher remains with the Applicant. These vouchers are redeemable at any time by the customer or client. A customer or client can purchase any product or service offered by the concerned brand, and applicable taxes are paid by the customer on the availed product or services at the time of redemption. He will redeem himself for the Rs. 100 value. 4. The applicants interpretation of law is as under : Relevant Extracts of law: Time of Supply of goods. Section 12 of the CGST Act, 2017: 12. (1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. (2)--------------------------------- (3)--------------------------------- (4) In case of supply of vouchers by a supplier, the time of supply 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. Time of Supply of services. Section 13 of the CGST Act, 2017: 13. (1) The liability to pay tax on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another; (b) import of services for a consideration whether or not in the course or furtherance of business and; (c) the activities specified in Schedule I, made or agreed to be made without a consideration (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule Il. (2) Notwithstanding anything contained in sub-section (1), (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Supply in case of goods as well as Services respectively. As per the sections, Time of Supply in case of supply of vouchers will be considered as the date on which redemption of vouchers takes place (in case the supply is not identifiable at the time of issuance of voucher.). In the instant case, supply is never identifiable at the time of purchase or sale of vouchers by the Applicant, Rather, the supply is identified only at the time of final redemption of the vouchers. Hence, the tax liability cannot arise at the time of sale of vouchers by the Applicant. 8. Following are the relevant judgments along with relevant extracts where it has been stated that vouchers are considered as instruments and as a result, vouchers are neither goods nor services and therefore cannot be taxed :- 1. M/sPremier Sales Promotion Pvt Limited Versus The Union of India Bearing writ Petition No. 5569 of 2022 (T-RES) dated 16.01.2023-Karnataka High Court 22. In substance the transaction between the assessee and his clients is procurement of printed forms and their delivery. The printed forms are like currency. The value printed on the form can be transacted only at the time of redemption of the voucher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case are taxable as per residual entry no. 453 of third schedule of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 (and similar notification under the UPGST Act) at the rate of 9% CGST and 9% UPGST. 11. The applicant was granted a personal hearing on 30.01.2024 which was attended, online, by Shri Manoj Kumar Goyal, CA, the authorized representative of the applicant during which he reiterated the submissions made in the application of advance ruling. DISCUSSION AND FINDING 12. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the 'CGST Act'. 13. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issues on which advance ruling required- (a) Determination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment instruments to individuals/organizations. The money so collected is used by these persons to make payment to the merchants who are part of the acceptance arrangement directly, or through a settlement arrangement. 17.2 Holder: Individuals/Organizations who acquire pre-paid payment instruments for purchase of goods and services, including financial services. 17.3 Pre-paid Payment Instruments: Pre-paid payment instruments are payment instruments that facilitate purchase of goods and services, including funds transfer, against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holders by cash, by debit to a bank account, or by credit card. The pre-paid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers and any such instrument which can be used to access the pre-paid amount (collectively called Prepaid Payment Instruments hereafter). The pre-paid payment instruments that can be issued in the country are classified under three categories viz. (i) Closed system payment instruments (ii) Semi-closed system payment instruments an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Applicant is not the issuer of the voucher, but is the third party who buys and sells the vouchers. Before we examine whether these vouchers are in the nature of goods or services or neither as goods nor as services, let us go through the definitions of these No terms, as defined under CGST/UPGST Act 2017, as under - Sec. 2 (52) of CGST Act, 2017- goods means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; Sec. 2 (102) of CGST Act 2017- services means anything other than goods, money and services but includes activities relating to the use of 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 In the present case, the Applicant purchases the vouchers by paying a consideration to the issuer . The vouchers are also sold to the clients of the Applicant for a consideration. The vouchers have both a value and an ownership, which is transferred by the issuer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Property Act, 1882. Further, Section 3 of the Transfer of Property Act, 1882 states as: Actionable Claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable Property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent . In case of Vouchers, it has already been observed that Voucher by itself is a movable property and hence constitutes goods. Since the Voucher is in the possession of the claimant at the time of the claim, hence it cannot be considered as actionable claim. 21. The Applicant has placed reliance upon three judgements (i) Sodexo SVC India Pvt. Ltd. vs State of Maharashtra (SC); (ii) Kalyan Jewellers India Ltd. (AAAR-TN) ; and (iii) Premier Sales Promotion Pvt. Ltd. vs The Union of India (Karnataka HC) First two judgements in Sodexo (SC) and Kalayan Jewellers (AAAR) are applicable to the issuer of the vouchers ; hence are not applicable to the present case, since the Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chers amounts to supply of goods or of services in terms of Section 7 (1) (a) of the CGST Act 2017. Section 7 (1) (a) of the CGST Act 2017 reads as under- Sec. 7. (1) For the purposes of this Act, the expression supply, ' includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; In the instant case the applicant is involved in trading of vouchers for a consideration in the course of furtherance of business. Though profit motive is not a requisite for the term supply, yet it is a fact that the Applicant is selling these vouchers at a profit. Thus, the impugned transaction amounts to supply of goods in terms of Section 7 (1) (a) of the CGST Act 2017. 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 henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not related and the price is the sole consideration for the supply. 25. So far as rate of tax on supply of vouchers is concerned, we rule that the vouchers in the present case are taxable as per residual entry no. 453 of Third Schedule of Notification No. 01/2017-Central Tax (Rate) dt. 28.06.2017 (and similar notification under UPGST Act) at the rate of 9% CGST and 9% UPGST. 26. In view of the above discussions, we, both the members, unanimously rule as under : RULING Question 1. 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 is taxable? Answer : Supply of Vouchers by the applicant are taxable as supply of goods and the time of supply shall be decided as per Section 12 (2) of the CGST Act 2017. Question 2 . If the answer to the above is in the affirmative, what would by the rate of tax and the value of supply at which this would be taxable? Answer : (i) Supply of Vouchers by the Applicant are taxable at the rate of 9% CGST and 9% UPGST as per residual entry no. 453 of Third Schedule of Notification No. 01/2017-Central Tax (Rate) dt. 28.06.2017 (and similar noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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