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TMI Blog2024 (10) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as 'Appellant') against the advance ruling no. UP ADRG-43/2024 dated 20.02.2024, made by the Uttar Pradesh State Authority for Advance Ruling. 2.2 The appellant is in the business of selling and purchasing Gift Cards, Vouchers, and pre-paid Vouchers (closed or semi-closed-ended vouchers against which goods or services can be purchased from specific brands on e-commerce platforms such as Amazon, Flipkart, etc.). These vouchers are purchased by the appellant from entities against advance payments and at a discounted price. Later, these vouchers are supplied to clients. Once these vouchers are purchased by the appellant from the original issuers, the appellant becomes the absolute owner of these vouchers, and both risk and reward lie with the appellant. The appellant is neither the issuing person nor the user of these Vouchers. 2.3 The Appellant had submitted application for Advance Ruling before the Authority of Advance Ruling for determination of following questions. (i) Whether the Vouchers themselves, or the act of supplying them is taxable, and at what stage, for each of the three categories of transaction undertaken by the appellant is taxable? (ii) If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey rely on the judgment of Premier Sales Promotion Ltd. 5.4 That the goods/services in their case are not identifiable at the time of issuance, hence, the time of supply of such instruments shall fall at the time of their redemption which usually happens only after the instruments are sold to the end consumers by the appellant, hence, the tax liability on sale of instruments by them are not liable to tax. Discussion and Findings 6.1 We have carefully gone through the records of the case and the submissions made by the Appellant in their application, defence made at the time of personal hearing and additional submissions submitted vide their letter dated 28.08.2024. Before getting into the discussion of the issue in the appeal, we find that there is a delay in filing the appeal. Hence the same needs to be examined first before moving forward to decide the issue raised in the Appeal 6.2.1 We find that in terms of Section 100 of the CGST Act, 2017, an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. As per the Appellant, the advance ruling dated 20.02.2024 was received by them on 25.05.2024 and the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven below: i. Issuer : Persons operating the payment systems issuing pre-paid payment 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. ii. Holder: Individuals/Organizations who acquire pre-paid payment instruments for purchase of goods and services, including financial services. iii. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in question are very much in the nature of "money" and hence excluded from the definition of "Goods" as well as from "Services" making the supply of these instruments non-taxable. The money is defined in terms of Sec. 2 (75) of CGST Act, 2017 as under: "'money' means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveler's 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." 7.4 Thus, money is primarily used to settle an obligation or exchange with Indian legal tender of another denomination. We find that the appellant in their additional submissions has claimed that their Vouchers and pre-paid Vouchers are closed Vouchers, hence, they cannot be used by the Appellant to settle an obligation, therefore, they cannot be considered as "money". Further, the definition of Closed System PPIs, provided by the RBI, in the master direction, defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration is charged; [Explanation-For the removal of doubts, it is hereby clarified that the expression "services" includes facilitating or arranging transactions in securities;] 9.2 In the instant case the Appellant purchases the vouchers by paying a consideration to the issuer. The vouchers are also sold to the clients of the Appellant for a consideration. The vouchers have both a value and an ownership, which is transferred by the issuer of these vouchers to the appellant, and then to the ultimate beneficiary who redeems the voucher. Therefore, the vouchers qualify to be considered as movable property and the "goods" 9.3 Next point to be considered is that whether the vouchers are in the nature of actionable claims. Actionable claim qualifies as 'goods'. Actionable claim is defined to have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882. Section 3 of defines it as under: "actionable claim" means a claim to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al made or agreed to be made for a consideration by a person in the course or furtherance of business; Here the appellant 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 Appellant 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 (a) of Schedule Il 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". 10.2 We observe that the Authority in its findings has observed the Vouchers in the instant case as 'goods' but have found that the time of supply shall be decided in terms of sub-section (2) of Section 12 of CGST Act, 2017 and Section 12 (4) of the CGST Act, 2017 is not applicable in case of appellant. We find that Section 12(2) & 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me supplies might not attract GST if they fall under exemptions, but they still have to be classified as either goods or services. Items like money, securities, and certain actionable claims (like lottery tickets) are outside the GST purview but are still recognized as either goods or services. Thus, there cannot be a supply that is neither goods nor services, but some supplies are non-taxable or exempt. 12.2 Under GST regime, the intention of lawmakers seems to be to levy tax on vouchers, as there are provisions in the law that define vouchers, the point of taxation thereof, and other aspects. 12.3 In the case of Yasha Overseas v Commissioner of Sales Tax (2015 (322) ELT 0007 S.C.), the apex court held that replenishment licences, considering their inherent value and free transferability, qualify as goods and are not merely an actionable claim. 12.4 If the coupons/vouchers represent a right to receive goods or services at a future date, and the trading activity involves the transfer of these rights without any physical goods being exchanged, it has to be considered a service since as per the GST law, the activity of providing or transferring a right to use goods or services is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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