TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 920
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.... "6. DISCUSSION& FINDINGS 6.1 We have considered the submissions made by the Applicant in their application for Advance ruling. On perusal of the impugned order, it is noticed that typographical error has indeed occurred in Para 7.11 and needs correction. However, since the correction sought in the rectification application has no effect in enhancing the tax liability or reducing the amount of Input Tax Creditvis-à-vis the impugned order, the requirement under proviso to Section 102 of the GST Act does not apply. The corrigendum as it stands after rectification is as follows: 6.2 The wordings "Gold Voucher" wherever it occurs in Para 7.11 of the Appeal order be replaced by "Gift Voucher." 3. By the impugned order dated 22.06.2021, the second respondent has partly allowed the application filed for rectification of its order passed earlier on 30.3.2021 by substituting the words/expression "Gold Voucher" with "Gift Voucher. The impugned order dated 22.06.2021 records that the change in the nomenclature will however have no bearing on the tax liability of the petitioner. 4. The petitioner herein had earlier sought for an Advance Ruling/clarification from the Advance Ruling....
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....nd 9% SGST as per Sl.No.382 of Schedule III of Notification Ms.No.II(2) /CTR/532(d-4)/2017 vide G.O.(Ms).No.62 dated 29.06.2017. * The questions raised at Sl.No.4,5,6 and 7 are not answered for the reasons that the said questions are not admitted as this authority does not have jurisdiction." 6. Aggrieved by the aforesaid order, the petitioner filed an appeal before the second respondent herein in A.R.Appeal No.01/2020/AAR. Vide order in Appeal No.AAAR/11/2021(AR) dated 30.03.2021, the second respondent had concluded as follows:- "7.9. To conclude, when a voucher is issued, though it is just a means of advance payment of consideration for a future supply, subsection (4) of section 12 and 13 determine the time of supply of the underlying good(s) or service(s). Voucher per se is neither a goods nor a service. It is a means for payment of consideration. 7.10. Therefore, there is no need to determine whether voucher is an actionable claim to arrive at a conclusion that it is neither a goods nor a service. 7.11. It therefore follows that where a voucher identifies the goods or service that can be received on redeeming, the supply of the underlying goods or service takes place a....
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....NG The Order of the Advance Ruling Authority is modified to the extent as discussed in para 7.11 and 7.13 above as follows:- The time of supply of the gift vouchers/gift cards by the applicant to the customers shall be the date of issue of such vouchers and the applicable rate of tax is that applicable to that of the goods. The subject appeal is disposed of accordingly." [* Note: The expression "Gold Voucher" was substituted with the expression "Gift Voucher" in the Impugned Order] 7. The above order dated 30.03.2021 in A.R.Appeal No.01/2020/AAAR holds that the " Gift Voucher" issued by the petitioner was neither a supply of goods nor a supply of services. At the same time, concludes that the voucher would be taxable at the time of its issuance in view of Section 12 (4)(a) of the respective GST enactments. 8. Under Such circumstances, the petitioner filed a rectification application under Section 102 of the respective GST Enactments Act on 28.04.2021 before the second respondent herein which has now culminated in the impugned order dated 22.06.2021 bearing reference No.AAAR/11/2021 dated 30.03.2021-ROM. 9. The facts of the case are that the petitioner, a Public Limited C....
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....are sold for cash and are treated as in terms of 'Money'. There are two significant stages in Gift Vouchers which need to be considered when processing transactions as follows:- * Sales: The Gift Vouchers/Cards are sold to the customers for cash and the business has an obligation to supply goods in specified future dates. * Redemption: Customers can redeem the Gift Vouchers/Cards (at the face value) in return, for the products. When the Applicant sells Gift Cards/Vouchers to the value of Rs.1,500/- the deferred revenue journal entries reflected in the record are as follows: Amounting for Gift Voucher transaction- Sales Account Debit Credit Cash/Bank Rs.1,500/- - Gift voucher liability Rs.1,500/- Total Rs.1,500/- Rs.1,500/- The Applicant has received the cash of Rs.1,500/-. However, the goods have not been provided / sold to the customers, therefore the revenue cannot be recognized. The amount is credited in the Balance Sheet as Gift Voucher Liability Account. When a Gift Voucher is redeemed by a customer, the Applicant satisfies its obligation to supply the goods and its liability is extinguished. The journal entry in the ledger will be as follows....
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....ned counsel for the petitioner as they do not satisfy the definition of "actionable claim" in Section 3 of the Transfer of Property Act, 1882. 21. Therefore, it was submitted that the argument of the petitioner that the petitioner was outside the purview of GST levy in view of Section 7(2) of the respective GST enactment read with Schedule III was irrelevant. 22. The learned counsel for the respondent would further submit that the petitioner has to merely alter the method of billing. It is submitted that at the time of issuance of PPIs /Voucher, tax has to be paid as they are issued for specified commodity sold by the petitioner and therefore, in terms of Section 12(4)(a)of the respective GST Enactments, tax was payable on the value of the" Gift Voucher"at the time of issuance of PPI's / Voucher by the petitioner. 23. It is further submitted that balance tax was payable only on the differential amounts payable at the time of redemption of the "Gift Voucher" and not on the entire value of merchandise to be purchased by customer once again. 24 I have considered the arguments advanced by the learned counsel for the petitioner and the learned counsel for the respondent. 25. I have....
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....howrooms in India. * Pan Card copy to be furnished for transactions above 2 Lakhs. * If mode of payment is cheque, then Qwikcilver gift card is subject to clearance of cheque. * Partial Redemption of this Qwikcilver gift card is not permitted. * The card has to be physically produced at the time of redemption. * All disputes are subject to jurisdiction of the Courts at Thrissur, Kerala. 32. To redeem the value in the "Gift Voucher/Card", a customer is expected to disclose the pin to the cashier in any of the petitioners' retail outlets across the country at the time of purchase. 33. The gross amount charged in invoice dated 10.12.2020 bearing reference Bill No.SLMGPSC03586 filed along with the typed set of papers in Page No.49 issued to a customer named Kannan Palanisamy at the time of redemption of the Gift voucher/Card in one of its outlet gives the following summary:- Invoice Summary Settlement summary Mode of Receipt Invoice details Invoice Amt. Transactions Amount Card 1,995.00 Gross Amount 20,117.43 Invoice Total 20,464.25 Cash 0.70 Less MC Discount 249.24 Less: Old Ornaments -8,468.55 Qwikcliver Voucher 10,000.00 Taxable Amount 19,868.19 N....
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.... reason the scheme is wound-up or is directed by RBI to be discontinued. 39. Para 13 of the Master Direction dated 11.10.2017 reads as under:- "13. Validity and Redemption 13.1. All PPIs issued in the country shall have a minimum validity period of one year from the date of last loading / reloading in the PPI. PPI issuers are free to issue PPIs with a longer validity. In case the PPI is issued in the form of card (with validity period mentioned on the card), then the customer shall have the option to seek replacement of the card. 13.2. PPI issuers shall caution the PPI holder at reasonable intervals, during the 45 days' period prior to expiry of the validity period of the PPI. The caution advice shall be sent by SMS / e-mail/post or by any other means in the language preferred by the holder indicated at the time of issuance of the PPI. 13.3 Non-bank PPI issuers cannot transfer the outstanding balance to their Profit & Loss account for at least three years from the expiry date of PPI. In case the PPI holder approaches the PPI issuer for refund of such amount, at any time after the expiry date of PPI, then the same shall be paid to the PPI holder in a bank account. 13.4 Ba....
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....d things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. The definition however excludes money and securities. 44. The expression "actionable claim" has been defined in Section 2(1) of the respective GST Enactment. It incorporates the definition of "actionable claim" in Section 3 of the Transfer of Property At, 1882. 45. The expression "voucher" has been defined in Section 2 (118) of the respective GST Enactments. As per Section 2(118) of the respective GST Enactments, a "voucher" is an "instrument" where there is an obligation to accept it as a consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied. 46. As per the definition of "voucher", the identity of the potential supply may be either indicated on the "instrument" itself or in a related documentation including the terms and conditions of use of such "instrument". 47. There is no definition for the expression "instrument" in the respective GST Enactments. The expression "instrument" is defined in Section 2(14) of the Indian Stamp Act, 1899. The definition of "instrument" in Sectio....
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.... a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument; 51. The definition of "Actionable Claim" in Section 3 of the Transfer of Property Act, 1882 is reproduced below for easy reference:- "Transfer of Properties Act, 1882 Section 3. Interpretation clause.-In this Act, unless there is something repugnant in the subject or context,- "actionable claim" means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent;" 52. There are distinct elements in the definition of "actionable claim" in Section 3 of the Transfer of Property Act. As the nomenclature suggest, an "actionable claim" is a "debt" or a "beneficial in....
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.... be treated as service? No. Since unsecured debt is an actionable claim, a transaction only in such actionable claim is outside the ambit of service. However if a service fee or processing fee or any other charge is collected in the course of transfer or assignment of a debt then the sampe would be chargeable to service tax. 2.8.9 Would sale, purchase, acquisition or assignment of a secured debt like a mortgage also constitute a transaction in money? Yes. However if a service fee or processing fee or any other charge is collected in the course of transfer or assignment of a debt then the same would be chargeable to service tax. 2.8.10 What is the scope of 'beneficial interest in moveable property' in the definition of actionable claim? Black's Law Dictionary defines 'beneficial interest' as follows - "A right or expectancy in something (such as a trust or an estate), as opposed to legal title to that thing. For example, a person with a beneficial interest in a trust receives income from the trust but does not hold legal title to the trust property" Therefore 'beneficial interest in moveable property' is a right or expectancy in a moveable property like right to receiv....
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....wever no definition for the expression "debt" in the respective GST enactments. 59. The Hon'ble Supreme Court in UOI Vs. Raman Iron Foundary, (1974) 2 SCC 231, referred to a famous quote of Lindley, L.J., in Webb v. Stenton [(1883) 11 QBD 518]. It reads as follows:- "a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation". There must be debitum in praesenti; solvendum may be in praesenti or in futuro -that is immaterial." 60. The expression "debt" was explained as follows:- "when there is an obligation to pay a sum of money at a future date, it is a debt owing but when the obligation is to pay a sum of money in praesenti, it is a debt due. A sum due would, therefore, mean a sum for which there is an existing obligation to pay in praesenti, or in other words, which is presently payable. 61. There, the Hon'ble Supreme Court referred to the famous passage from the decision of the Supreme Court of California in People vs. Arguello (1869) 37 Calif 524 which was quoted with approval by the Hon'ble Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth Tax, AIR 1966 SC 1370. 62. The Hon'ble Su....
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....ng through the entire clause 18. 63. "Gift Voucher/Card" issued by the petitioner is a "document" within the meaning of Section 3(18) of the General Clause Act, 1897 and thus an "instrument" within the meaning of Section 2(14) of the Indian Stamp Act, 1899 as a right/liability is created and is recorded. The amount specified in it is a debt. 64. "Gift Voucher/Card" thus acknowledges debt. Thus, "Gift Voucher/Card" is nothing but a "debt instrument". It can be redeemed on a future date on its presentation towards 'sale consideration' for purchase of the merchandise from any one of the petitioner's retail outlets. 65. The value of the "Gift Voucher/Card" is meant to be set-off towards payment for the sale of the merchandise traded by the petitioner. A customer or his or her donee is/are entitled to redeem the value in the "Gift Voucher/Card" towards sale consideration of purchase to be made by them from the petitioner's outlet under the terms of the scheme under which it is issued. If the petitioner commits a breach or fails to allow such redemption, such customer would have right to enforce. 66. The amount acknowledged therein is refundable to the customer after the expiry of th....
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.... with Section 7 of the respective GST Enactments lists the activities or transactions which shall be treated neither as supply of goods nor supply of services. 75. Relevant portion of Section 7(2)(a) and Sl.No.6 to Schedule III of the respective GST Enactments are reproduced below for easy reference:- Section 7:-Scope of Supply:- Schedule III (2)Notwithstanding anything contained in sub-section (1),- (a)activities or transactions specified in Scheduled III, or (b)......... Shall be treated neither as. Supply of goods nor a supply of services. Activities or Transactions which shall be treated neither as a supply of Goods nor a supply of services: 6. Actionable claims, other than lottery, betting and gambling. 76. As per Section 7(2) of the respective GST Enactments, activities or transactions specified in Schedule III shall be treated neither as supply of goods nor supply of services. 77. Therefore, the petitioner is not liable to pay tax on "Gift Voucher/Card" in view of in view of Section 7(2)(a) r/w Sl.No.6 to Schedule III of the respective GST Enactments. 78. Since "Actionable claim" is specified in Sl.No.6 in the Schedule III, no tax is payable on it. "Gift vouc....
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....n payment of full consideration as agreed, is a supply of goods. Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated as either as supply of goods or supply of service as referred to in Schedule II. 85. As per clause 1(a) to Schedule II of the respective GST Enactments read with Section 7(1-A) of the Enactments, any transfer of title in goods is a supply of goods. 86. Similarly, under clause 1(c) to Schedule II of the respective GST Enactments read with Section 7(1-A) of the Enactments, any transfer of title in goods under an agreement which stipulates that property in goods shall pass on a future date upon payment of full consideration as agreed, is to be treated as a supply of goods or service. 87. Thus, if the "Gift Voucher/Card" is issued for an identified goods/ merchandise, tax is payable notwithstanding the fact that only a part of the sale consideration is/was received by the petitioner in advance at the time of issuance of the "Gift Voucher/Card". 88. If the sale of an identified merchandise of specified amount is concluded at the time of issuance of "Gift Voucher/ Gift Card" although....
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....se traded or service supplied by a dealer on a future date, the time of supply of goods or service for the purpose of taxation will be postponed to a future date ie. to the date of redemption of the "Gift Voucher / Card" against the actual purchase of the article, goods or item or merchandise or purchase of sale service as the case may be. 95. Therefore, unless there a clear identity of the "goods" or "service" and its value is ascertained on the date of issuance of the "gift voucher", question of taxing a future supply of an unspecified goods or service which is to take place on a future date is not contemplated under the Scheme of the respective GST Enactments. This is the true purport of Section 12(4) of the respective GST Enactments. 96. Incidentally, the Karnataka High Court in M/s. Premier Sales Promotion Pvt. Limited, vs. The Union of India, Ministry of Finance, Department of Revenue, North Block, New Delhi 110 001 2023(70) GSTL 345, held as follows:- 21. It is not in dispute that the vouchers involved in the instant petition are semi-closed PPIs in which the goods or services to be redeemed are not identified at the time of issuance. Vouchers are distributed to its empl....
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....t is that all the State Assemblies merely followed the Parliament and passed the respective State GST Enactments for their respective States in line with the avowed philosophy under amendment to the Constitution for One nation One Tax under the GST Regime. 105. Although, Point of Taxation Rules, 2011, existed under the previous regime under the Finance Act, 1994 with effect from 1.4.2011 vide Notification No.18/2011-ST dated 1.3.2011, it did not specifically deal with voucher, as an "actionable claim" was outside the purview of the definition of "goods" for the purpose of Section 65B(25) of the Finance Act, 1994 and definition of "service" in Section 66(44) of the Finance Ac, 1994 which was defined these two expressions for the first time with effect from 01.07.2012 vide Finance Act, 2012. 106. Therefore, the view of the Advance Ruling Authority dated 24.11.2019 vide its Order No.52/ARA/2019, that the time of supply of the "Gift Vouchers/ Cards" issued by the petitioner to the customers shall be the date of issuance of such vouchers irrespective of the nature of transaction and rate of tax is that applicable to that of the goods is not fully correct. 107. At the same time, the c....