2021 (12) TMI 1299 - AAAR - GST

Taxable Goods: Vouchers under GST Law, Rate 18%

In Re: Premier Sales Promotion Pvt. Ltd.

The Appellate Authority upheld the ruling that the supply of vouchers is taxable as goods under GST law at a rate of 18%. The time of supply for the ... Applicability of GST - transactions of sale of vouchers - the vouchers traded by the Appellant are goods or actionable claims - 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 Appellant? - rate of tax at which this would be taxable i.e what category would this be taxed under - HELD THAT:- The vouchers in question are undoubtedly payment instruments recognised by RBI. The question is however, whether these vouchers can be considered as 'money'. The finding of the lower Authority is that these vouchers are not used by the Appellant to settle an obligation and hence cannot be considered as 'money' ; that it takes on the colour of money only when it is redeemed by the beneficiary at the time of purchase of goods and/or services - The voucher in the hands of the Appellant, does not settle an obligation but rather creates an obligation. The settlement of the obligation occurs at the time when the ultimate beneficiary uses the voucher to purchase goods and/or services. The definition of money also makes it clear that it is only when the payment instrument is used as consideration to settle an obligation, does it qualify as 'money'. This occurs only when the voucher is redeemed. Until then it is just an instrument recognised by the RBI but is not ‘money'. Therefore, the voucher in the hands of the Appellant cannot be termed as 'money'. In the instant case, the definition of goods in the CGST Act is much more explicit and states clearly what goods mean, what is excluded from the meaning of goods and what is included in the meaning. Further, the nature of the transaction in the case before us is different from the nature of the transaction by Sodexo in as much as the Appellant is clearly not the issuer of the vouchers nor is he authorized by RBI to issue vouchers. The Appellant is buying vouchers from entities authorized to issue them and is selling the same to his clients. In other words, the Appellant is purely trading in vouchers - the vouchers being traded by the Appellant are in the nature of goods. The supply of vouchers by the Appellant is a supply of goods in terms of Section 7 of the CGST Act - on the aspect of value of the vouchers for the purpose of GST, the rate of tax and the time of supply of the vouchers by the Appellant. Since the Appellant is not the issuer of the voucher, the provisions of time of supply under Section 12(4) will not apply and the time of supply will be governed by the provisions of Section 12(5) of the CGST Act. Issues Involved:1. Taxability of vouchers and the stage at which they become taxable.2. Classification of vouchers as goods or actionable claims.3. Applicability of GST on the supply of vouchers.4. Rate of tax applicable to vouchers.5. Time of supply for vouchers under GST law.Detailed Analysis:1. Taxability of Vouchers:The primary issue was whether the vouchers themselves, or the act of supplying them, is taxable under GST. The AAR held that the supply of vouchers is taxable and the time of supply in all three cases would be governed by Section 12(5) of the CGST Act, 2017. The rate of tax on the supply of vouchers was determined to be 18% GST as per entry no. 453 of Schedule III of Notification No. 01/2017-Central Tax (R) dated 28.06.2017.2. Classification of Vouchers as Goods or Actionable Claims:The appellant argued that vouchers are instruments redeemable for goods or services and should be considered as consideration rather than goods. They contended that vouchers are payment instruments under the Payment and Settlement Systems Act, 2007, and thus should not be classified as goods. The AAR, however, classified the vouchers as goods, stating that they have a value and ownership that transfers from the issuer to the beneficiary upon redemption.3. Applicability of GST on the Supply of Vouchers:The appellant argued that vouchers are not goods or services but are payment instruments or consideration for future supplies, and thus should not be subject to GST. They relied on the Supreme Court decision in Sodexo SVC India Pvt Ltd vs State of Maharashtra, which held that vouchers are not goods. The AAR disagreed, stating that the vouchers traded by the appellant are goods and not actionable claims, and thus are subject to GST.4. Rate of Tax Applicable to Vouchers:The AAR determined that the rate of tax on the supply of vouchers is 18% GST. The appellant contested this, arguing that since vouchers are not goods, they should not be subject to GST. However, the AAR upheld its decision, stating that the vouchers are goods and thus taxable at 18%.5. Time of Supply for Vouchers under GST Law:The appellant argued that the time of supply should be determined based on the redemption of the vouchers, as per Section 12(4) of the CGST Act. The AAR, however, ruled that since the appellant is not the issuer of the vouchers, the time of supply is governed by Section 12(5) of the CGST Act, which applies to the supply of goods.Conclusion:The Appellate Authority upheld the AAR's ruling that the supply of vouchers is taxable as goods under GST law, with a tax rate of 18%. The time of supply for the vouchers is determined by Section 12(5) of the CGST Act. The appeal filed by the appellant was dismissed on all counts.