Lapsed reward points lose actionable claim status and forfeited value forms taxable consideration for services.

Reward points under a loyalty programme initially amount to actionable claims, but once their validity period expires and the customer's enforceable right to redeem them ends, they cease to qualify as actionable claims. Their forfeiture is therefore not a transfer of actionable claim excluded from supply. The retained issuance fee is treated as revenue earned for services rendered to the applicant's partners and forms part of the consideration for supply of services, making it liable to GST.

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Issues: Whether reward points that lapse on expiry of their validity period continue to constitute actionable claim and whether the amount retained by the applicant on forfeiture of such points is liable to GST as consideration for supply of services.

Analysis: The statutory scheme treats actionable claim as having the meaning assigned in the Transfer of Property Act, 1882, and Schedule III excludes actionable claims other than lottery, betting and gambling from supply. The reward points issued under the loyalty programme were initially in the nature of actionable claim, but once the validity period expired and the end customer lost the enforceable right to redeem them, they ceased to answer the definition of actionable claim. The forfeiture of such lapsed points therefore did not amount to transfer of actionable claim. The retained issuance fee, under the agreement, represented revenue earned by the applicant for services rendered to its partners and formed part of the remuneration for those services.

Conclusion: The forfeited value of reward points was not outside GST as an actionable claim and was correctly treated as consideration for supply of services, liable to GST.

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