TaxTMI 
TaxTMI 
2024 (1) TMI 920
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....d by by the second respondent reads as under:- "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....
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....under CTH 8523 the applicable rate is 9% CGST as per Sl.No.382 of Schedule III of the Notification No.1/2017- C.T.(Rate) dated 28.06.2017 and 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.....
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....assifiable according to the nature of the goods or services supplied in exchange of the voucher earlier issued to the customer" 8. In the light of the above, we rule as under: RULING 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 b....
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....er. The accounting procedure adopted by the petitioner was described before the said authority as follows:- "Gift Vouchers are sold by a business concern to customers to allow them to purchase the products on a future date. The Cards 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....
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....ner . 19. It is submitted that Section 12(4) of the respective GST Enactments specifically deals with supply of "Vouchers"as defined in Section 2(118) of the respective GST enactments and therefore, the Impugned Order of the second respondent-TNSAAAR does not fall for any interference. 20. It is submitted that PPI's / Voucher are not "actionable claim"as was argued by the learned 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....
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....ime redemption for settling payment on a future date. 31. The terms and conditions of "Owikcilver Gift Card" reads as under:- * Qwikcilver gift card is valid for 365 days from the date of issue. * This Qwikcilver gift card expires on 01.12.2021. * This Qwikcilver gift card is non-refundable. * This Qwikcilver gift card can be adjusted against purchase of any jewellery across Kalyan Jewellers showrooms 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 o....
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....l/authorization by the RBI." 37. If the amount paid is non-refundable, the Gift Card/Voucher will not satisfy the requirement of Para 13.3 of the Master Direction dated 11.10.2017. Para 13.3 of the Master Direction dated 11.10.2017 clarifies that 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. 38. Further, as per para 13.7 of the Master Direction dated 11.10.2017, a holder of PPIs is permitted to redeem the outstanding balance in the PPI, if for any 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....
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....s in the Country that were in force earlier prior to the enactment of the respective GST Enactments, specifically excluded "actionable claim" from their definition. This was also noted by the Hon'ble Supreme Court in Sunrise Associates. Vs Govt. of NCT,New Delhi and Others (2006) 5 SCC 603. 43. However, there is a marked departure under the new regime under the respective GST Enactment as in force from 1.7.2017. The expression "goods" has been defined in Section 2(52) of the respective GST Enactments. The definition of "goods" includes every kind of moveable property. The definition of "goods" also includes "actionable claim", growing crops, grass and 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 Ena....
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....eference:- Section 2 :- In this Act, unless the context otherwise requires:- Section 2(1)"Actionable claim" shall have the same meaning assigned to it in Section 3 of the Transfer of Property Act, 1882(4 of 1882). Section 2(52) Section 2(118) "Goods" means every kind of movable property other than money and securities but includes actionable claim, "Voucher" means an instrument where there is an obligation to accept it as consideration or part Section 2 :- In this Act, unless the context otherwise requires:- growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. consideration for 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 cl....
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.... reproduced below:- 2.8.7 What are actionable claims? As per section 3 of the Transfer of Property Act, 1893 actionable claims 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 recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent. Illustrations of actionable claims are - * Unsecured debts *Right to participate in the draw to be held in a lottery. 2.8.8 If an unsecured debt is transferred to a third person for a consideration would this activity 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....
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....the employer in the course of employment are outside the ambit of services. Services provided outside ambit of employment for a consideration would be a service. For example, if an employee provides his services on. contract basis to an associate company of the employer, then this would be treated as provision of service. 56. The Education Guide clarified that an "unsecured debt" is an "actionable claim" and transaction in "actionable claim" were outside the ambit of the definition of "service". 57. Educational Guide though issued in the context of amendment to the provisions of Finance Act, 1994 on 20.6.2012 does serve as a use guide. A part of the clarification contained is useful to answer the present query in so far as the definition of "actionable claim" under the Section 3 of the Transfer of Property Act, 1882 is concerned. It is relevant for the purpose of the present discussion. 58. There is however 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:- ....
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....ich was approved by this Court in Kesoram Industries v. Commissioner of Wealth Tax [AIR 1966 SC 1370 : (1966) 2 SCR 688, 702 : 59 ITR 767] clearly brings out the essential characteristics of a debt: (at p. 702) "Standing alone, the word 'debt' is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable. If we wish to distinguish between the two, we say of the former that it is a debt owing, and of the latter that it is a debt due." This passage indicates that 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. Recovery of such sums is the subject matter of clause 18 according to the heading. That is the dominant idea running 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 Ind....
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.... customer under "Gift Voucher/Card" when read with the RBI Master Direction as a ground for affording a relief to a distraught customer who is either unable to use the "Gift Voucher/Card" or who fails to get a credit of the amount into his or her account after the period of its validity, if for some reason, "Gift Voucher/Card" was not redeemed by the customer. 72. The "Gift Voucher/Card" is a debit card. It is like a frozen cash received in advance and thaws on its presentation at the retail outlet for being set off against the amount payable by a customer for purchase of merchandise sold by the petitioner or the amount specified therein is to be returned to the customer as per RBI's Master Direction where a customer fails to utilize it within the period of its validity. 73. "Gift Voucher/Card" is therefore an "actionable claim" within the meaning of Section 2(1) of the respective GST Enactments read with Section 3 of the Transfer of Property Act, 1882. 74. Schedule III read 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)....
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....fied goods at the time of issuance of the "Gift voucher/ Card", as there is supply of an identified good in view of Section 12(4)(a) of the respective GST Enactments. 83. Such transactions are "supply" and therefore "transfer" within the meaning of clause 1(a) and 1(c) to Schedule II of the respective GST Enactments read with Section 7(1-A) of the respective GST Enactments. There is also sale within in the meaning of Section 4 of the Sale of Goods Act, 1930. 84. Section 7(1A) and Clauses 1(a) and 1(c) to Schedule II of the Respective GST Enactments read as under:- II Schedule of the Respective GST Enactments. Activities or Transaction to be treated as supply of Goods or service Section 7 of the Respective GST Enactments. Scope of Supply: For the purpose of this Act, the expression "supply" includes:- Sl.1- Sub Section (1-A) Transfer (a)any transfer of title in goods is a supply of good c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. Where certain activities or transactions constitute a supply in ac....
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....f time or later. 92. For instance, a person may buy a voucher or a coupon as a "gift" of a specified goods of a specific value for being gifted to a donee. The donee, is merely required to collect the merchandise from the store by presenting the "Gift Voucher/Card" and the complete the sale by taking delivery of the goods. It will be a situation covered by Section 12(4)(a) of the respective GST Enactments. 93. Similarly if the goods are identified at the time of the issuance of the "Gift Voucher/Card", GST is payable although full payment is not made and payments are made in installments and delivery is taken later. Here, the generation of invoice and delivery of the identified goods or merchandise or article is merely postponed to a future date i.e. on the date of production/presentation of "Gift Card/ Gift Voucher". 94. On the other hand, if the "Gift Voucher/Card" is issued for a particular value which is to be redeemed for purchase of an unspecified and unidentified article, goods or item or merchandise etc., from the whole range of such article, goods or item or merchandise traded or service supplied by a dealer on a future date, the time of supply of goods or service....
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....t was in circulation 2016 corresponds to Section 12 of the respective GST Enactments. 100. A provision similar to Section 12(4) was not there in the Model GST Law that was in circulation in 2016 although a provisions for determining continuous supply of services under the proposed GST Enactments was there. Clause 11(4) of the Model GST Law read as under:- "11(4) For the purpose of sub-section (3) above, the Central or a State Government may specify, by notification, the services that shall be treated as continuous supply of services." 101. The other reason for confusion is perhaps because, both the Union and the State GST Bills which preceded the enactment of the respective GST Enactments did not precede a detailed discussions or deliberations on this aspect in the Parliament. 102. The Goods and Service Tax Council (GST Council) which was constituted under Article 279A of the Constitution of India must have deliberated on the same. 103. However, Court was unable locate the deliberation of the GST Council on this aspect. For sure, there would have been some discussion on the subject. 104. What is evident is that all the State Assemblies merely followed the Pa....