2024 (7) TMI 1060 - AAR - GST

Vouchers qualify as movable property and goods under Section 7(1)(a) CGST Act 2017, taxable at 18%

In Re: M/s. Payline Technology Private Limited

The UP AAR held that vouchers qualify as movable property and goods under GST law. The applicant's purchase and sale of vouchers to clients constitutes ... Taxability - vouchers themselves, or the act of supplying them is taxable, and at what stage, for each of the three categories of transactions - rate of tax - value of supply - HELD THAT:- 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 these vouchers to the Applicant, and then to the ultimate beneficiary who redeems the voucher. No element of service is involved between the issuer of vouchers and the Applicant and also between the Applicant and the purchaser. These vouchers are freely transferrable. Therefore, the vouchers qualify to be considered as movable property and the goods. Whether the vouchers are in the nature of actionable claims. As per the definition provided in section 2 (52) of the CGST Act 2017, “goods” includes “actionable claims”? - 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. 100/-. 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 - 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”. The vouchers in the present case are taxable as per residual entry no. 453 of Third Schedule of N/N. 01/2017-Central Tax (Rate) dt. 28.06.2017 (and similar notification under UPGST Act) at the rate of 9% CGST and 9% UPGST. Issues Involved:1. Taxability of vouchers and the act of supplying them.2. Rate of tax and value of supply for the vouchers.Issue-wise Detailed Analysis:1. Taxability of Vouchers and the Act of Supplying Them:The applicant, M/s. Payline Technology Private Limited, engaged in the business of selling and purchasing gift cards, vouchers, and pre-paid vouchers, sought an advance ruling on whether the vouchers themselves or the act of supplying them is taxable, and at what stage. The applicant argued that vouchers are merely instruments for advance payment and should not be treated as taxable goods or services under GST.The Authority for Advance Ruling (AAR) examined the definitions under the CGST Act, 2017, including 'goods,' 'services,' 'money,' and 'voucher.' The AAR concluded that vouchers are movable property and qualify as 'goods' because they have value and ownership that can be transferred. The AAR also noted that vouchers do not qualify as 'money' since they are not used to settle an obligation by the applicant but are traded for profit.The AAR referenced several judgments, including those from the Supreme Court and High Courts, but found them not directly applicable to the applicant's case since the applicant is a trader of vouchers, not the issuer. The AAR determined that the trading of vouchers by the applicant constitutes a supply of goods under Section 7(1)(a) of the CGST Act, 2017, as the applicant is involved in the sale of vouchers for consideration in the course of furtherance of business.2. Rate of Tax and Value of Supply for the Vouchers:After determining that the vouchers are 'goods,' the AAR proceeded to ascertain the time of supply and the applicable tax rate. According to Section 12(2) of the CGST Act, 2017, the time of supply of goods is the earlier of the date of issue of the invoice or the date of receipt of payment. The specific provision for vouchers under Section 12(4) was deemed not applicable to the applicant, as it applies to the issuer of the vouchers.For the valuation of vouchers, Rule 32(6) read with Section 15 of the CGST Act, 2017, was considered. The value of supply of vouchers should be the transaction value, which is the price actually paid or payable for the supply of goods or services where the supplier and recipient are not related, and the price is the sole consideration.The AAR ruled that the vouchers in the present case are taxable as per residual entry no. 453 of the Third Schedule of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017, at the rate of 9% CGST and 9% UPGST.Ruling:1. Taxability: Supply of vouchers by the applicant is taxable as a supply of goods, and the time of supply shall be decided as per Section 12(2) of the CGST Act, 2017.2. Rate of Tax and Value of Supply:- Supply of vouchers by the applicant is taxable at the rate of 9% CGST and 9% UPGST as per residual entry no. 453 of the Third Schedule of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.- The value of supply of vouchers shall be decided as per sub-sections (1), (2), and (3) of Section 15 of the CGST Act, 2017.This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and is subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.