GST applies to voucher trading by intermediaries as both goods supply and trading services under Section 7(1)(a)

The UP AAAR ruled on GST treatment of voucher trading by a third-party intermediary. The authority held that vouchers constitute movable property and qualify as goods, not actionable claims since they remain in the claimant's possession. The appellant's trading activity involves two taxable supplies: (i) supply of vouchers as goods under Section 7(1)(a) CGST Act, with time of supply governed by Section 12(4), and (ii) provision of trading services taxable on the commission/discount margin earned. The ruling set aside the lower authority's decision, establishing that GST applies both to voucher supply and the intermediary's trading services.

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Issues Involved:

1. Taxability of Vouchers and the stage at which they are taxable.
2. Rate of tax and value of supply for Vouchers.
3. Delay in filing the appeal.
4. Classification of Vouchers as goods or services.
5. Applicability of GST on the commission/discount earned in trading Vouchers.

Detailed Analysis:

1. Taxability of Vouchers and the Stage at Which They Are Taxable:

The primary issue was whether the supply of Vouchers by the appellant is taxable and at what stage. The Authority for Advance Ruling initially held that the supply of Vouchers is taxable at 9% CGST and 9% UPGST under residual entry no. 453 of the Third Schedule of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017. However, upon appeal, the Appellate Authority found that the supply of Vouchers should be considered as a supply of goods and the time of supply should be determined as per Section 12(4) of the CGST Act, 2017. This section specifies that the time of supply shall be the date of issue of the voucher if the supply is identifiable at that point, or the date of redemption in all other cases.

2. Rate of Tax and Value of Supply for Vouchers:

The appellant contended that the Vouchers are in the nature of "money" and thus excluded from the definition of "goods" and "services," making them non-taxable. However, the Appellate Authority determined that Vouchers are movable property and qualify as "goods." The value of the supply of Vouchers is to be decided as per Section 15 of the CGST Act, 2017. The ruling clarified that the value of service should be the margin between the buying and selling price of the Vouchers/Coupons.

3. Delay in Filing the Appeal:

The appellant filed the appeal beyond the stipulated 30 days from the date of communication of the advance ruling order. The delay was attributed to the non-uploading of the order on the portal, leading the appellant to physically procure the order from Lucknow. The Appellate Authority, after considering the reasons provided by the appellant, condoned the delay under the proviso to Section 100(2) of the CGST Act, 2017, which allows for an extension if the appellant was prevented by a sufficient cause from presenting the appeal within the prescribed period.

4. Classification of Vouchers as Goods or Services:

The Appellate Authority examined whether Vouchers are classified as goods or services. The Authority concluded that Vouchers are considered "goods" because they are movable property with both value and ownership transferred from the issuer to the appellant and then to the ultimate beneficiary. The Authority also noted that Vouchers do not qualify as "money" since they cannot be used by the appellant to settle an obligation. Furthermore, Vouchers are not actionable claims as they are in the possession of the claimant at the time of claim.

5. Applicability of GST on the Commission/Discount Earned in Trading Vouchers:

The appellant argued that the trading of Vouchers should not attract GST. However, the Appellate Authority held that trading in Vouchers/Coupons is a taxable event under GST. The trading of Vouchers amounts to a supply of goods, and the GST is applicable on the commission or discount earned by the appellant during such trading. The time of supply is when the Vouchers/Coupons are traded or sold, and the value of service is the margin between the buying and selling price.

Conclusion:

The Appellate Authority set aside the previous ruling by the Authority for Advance Ruling, determining that the supply of Gift cards/Vouchers/pre-paid Vouchers is taxable as a supply of goods. The time of supply is to be decided according to Section 12(4) of the CGST Act, 2017. GST is applicable on the commission/discount earned in trading Vouchers/Coupons, with the value of service being the margin between the buying and selling price. This ruling is specific to the facts and circumstances of the appellant's case and is applicable within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh.

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