GST ON TRADING OF VOUCHERS (WHERE SUPPLY IS NOT IDENTIFIABLE AT THE TIME OF SALE OF VOUCHERS)

[ajay chharia]

GST ON TRADING OF VOUCHERS (WHERE SUPPLY IS NOT IDENTIFIABLE AT THE TIME OF SALE OF VOUCHERS)

M/s XYZ Ltd. (Company) is online traders of various good have its own online portal. The company sold only its own goods. In addition to goods the Company also sold the vouchers (where supply is not identifiable at the time of sale of vouchers), which used at specific merchant location (for exp. Amazon) for purchases of goods or services but not for cash withdrawal. Merchant duly charged the CGST/SGST/IGST on its supply and reduce voucher amount from the final invoice amount.

The company purchase the vouchers (on which supply is not identifiable) from another company having face value of ₹ 1,000/- at ₹ 950/- and sold the same online to its customer @ ₹ 975 to 1,000/- through its own portal.

The Seller selling these vouchers to the company is not charging any GST on these voucher Sales.

My queries are: -

1. Whether the sale of Vouchers (Supply is not identifiable) to customer is treated as supply of goods or supply of services as defined under the provision of the CGST/SGST Acts,

2. IF Yes, what is time of supply, warranting tax liability,

3. IF Yes, what is the HSN/SAC Code with Rate of Tax,

4. IF No, GST collection at the time of redemption of voucher by the merchant will be sufficient compliance of the provision of CGST Act,

5. IF No, whether margin earn by the company is taxable,

6. IF margin is taxable, then under which HSN/SAC Code and at What Rate.

7. Whether the company book the sale/Purchases of the Voucher in his Profit and Loss Account Separately or only differential margin as its Income.

Note:- As per section 12(4) of the CGST Act, 2017 time of supply of voucher , is date of redemption where the supply is not identifiable.

[KASTURI SETHI]

Go through the following decision of AAR for all your queries:-

2020 (32) G.S.T.L. 689 (A.A.R. - GST - T.N.) = 2020 (1) TMI 30 - AUTHORITY FOR ADVANCE RULING, TAMILNADU IN RE : KALYAN JEWELLERS INDIA LIMITED

[ajay chharia]

Respected Sethi ji

I had gone through AR in case of Kalyan Jewelers , the authority has replied only one reply i.e., when vouchers are sold in physical form as voucher or as a gift voucher. In my query the coupons are virtual, online only. They have not replied other question due to out of their preview.Your valuable opinion on the queries are most welcome.

[YAGAY andSUN]

Being virtual means part of a software or software i.e. if vouchers are being issued virtually, then, it will also a value to get some sort of goods/services or both. In other words if physical vouchers are treated as goods then virtual vouches can be treated as services, and hence prone to tax under GST Laws.

[KASTURI SETHI]

Virtual voucher can also take the form of physical voucher. Hence no difference. So in my view, virtual vouchers are also goods.

[ajay chharia]

As per above discussion, vouchers as defined u/s 2(118) of CGST ACT, 2017 are taxable as goods. Section 12(4) tells the time of supply in case is supply of voucher.

My client is doing only trading of voucher against which supplies are not identifiable. Clause b of sec 12(4) says that in such cases time of supply is the date of redemption.As my client is doing only trading of vouchers and not redeeming the voucher,therefore the time of supply is not yet come,hence he is not authorise to tax the sale of voucher and consequently not liable for any output GST.

Pl.confirm whether my conclusion is correct or not.

If ,yes ,the trading of VOUCHERS will be treated as non supply under GST or exempted sales.

What will be the treatment of profit earn on the trading of VOUCHERS?

[KASTURI SETHI]

In my view, trading of vouchers cannot be treated as non-GST supply. It is classifiable under Heading 4911 10 90 of Customs Tariff Act, 1975 as applicable to GST attracting CGST 6% and SGST 6%. No specific exemption has been provided hence tax is leviable. Ultimately it is redeemable. Your client is also not out of Section 12 (4) of CGST Act. Trading of vouchers cannot be termed as non-GST supply on the ground that his activity is out of the scope/definition of 'Time of supply' under Section 12 of CGST Act.

(b) the date of redemption of voucher, in all other cases

[ajay chharia]

With regard to Sethi ji , my humble submission is:

As the company is doing only trading of Vouchers(Where supply is not identifiable), the time of supply is not yet reach as per sec 12(4)/13(4).Although vouchers are taxable at the time of redemption ,at rate which is chargeable on goods/service for which these vouchers are redeemed. The company is doing only trading no redemption, then for the company , what will the point of time at which liability to charge tax arises. The vendor who is supplying me the voucher is also not charging any GST.

AI Summary

GST Applies to Trading Vouchers: Classified Under Heading 4911 10 90, Subject to CGST and SGST, No Exemptions. The discussion revolves around the Goods and Services Tax (GST) implications on trading vouchers where the supply is not identifiable at the time of sale. A company purchases vouchers at a discount and sells them online. The primary queries include whether the sale of these vouchers is considered a supply of goods or services, the time of supply, applicable tax codes, and whether the margin earned is taxable. The discussion references a ruling related to physical vouchers and debates whether virtual vouchers should be treated similarly. It concludes that trading vouchers are taxable under GST, classified under Heading 4911 10 90, attracting CGST and SGST, with no specific exemption provided.