TAXABILITY (SERVICE TAX/ VAT) ON SALE OF GIFT VOUCHERS

[Sudhir Goyal]

Dear Expert,
Kindly assist me on following issue:

Suppose an agent purchases gift vouchers (multipurpose voucher) having value of ₹ 2000 each from Flipkart @ ₹ 1800 and sold the same to company at @ ₹ 1900. Company distribute those gift voucher having value of ₹ 2000 each to its employee on some occasion and The gift voucher gives right to employees to claim them at Flipkart.com for shopping value of ₹ 2000 for any goods/services.

Now my query is,
1.What would be the taxability of tax (service tax/ VAT) on agent hands who earn ₹ 100 margin ?.

2. Further, Agent do not disclose the margin money to customer hence how to invoice the same to customers ?

Thanks in Advances !

AI Summary

Taxability of gift vouchers hinges on their classification as goods, services, or actionable claims under indirect tax law.
Taxability of multipurpose gift vouchers depends on their classification: as goods they attract VAT/sales tax; as services they attract service tax; if treated as actionable claims they may fall outside service tax under pre-GST law. Judicial and tribunal authorities have reached inconsistent conclusions, and the draft GST framework treats actionable claims as goods, suggesting vouchers could be taxed under GST. The agent's resale margin should be treated in accordance with the applicable classification for invoicing and indirect tax compliance.