TaxTMI 
TaxTMI 
2024 (7) TMI 1060
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs are purchased by the Applicant against advance payments. These vouchers are purchased at a discounted price from the vendors. Later on, these vouchers are supplied to clients as per the order placed. Once these vouchers are purchased by the Applicant from the original Issuers, the Applicant becomes the absolute owner of these vouchers, and both risk and reward lie with the Applicant. For example:-The applicant purchases the vouchers amounting to Rs. 100 at a discounted price as they purchase the vouchers by making an advance payment and in bulk at Rs. 95 per voucher. Further, these vouchers are sold to clients for Rs. 96 each. Thus, the profit of Rs. 1 per voucher remains with the Applicant. These vouchers are redeemable at any time by the customer or client. A customer or client can purchase any product or service offered by the concerned brand, and applicable taxes are paid by the customer on the availed product or services at the time of redemption. He will redeem himself for the Rs. 100 value. 4. The applicants interpretation of law is as under : Relevant Extracts of law: Time of Supply of goods. Section 12 of the CGST Act, 2017: 12. (1) The liability to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9; includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Explanation.-For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another; (b) import of services for a consideration whether or not in the course or furtherance of business and; (c) the activities specified in Schedule I, made or agreed to be made without a consideration (1A) where certain activities or transactions constitute a supply in accordance with the provis....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., as long as such instrument is recognized by the Reserve Bank of India. Even if such voucher is not recognized by Reserve Bank of India, it would still form a mean of payment of consideration, though it does not constitute money under the above definition. Voucher under GST law has also been recognized as an instrument of consideration (non-monetary form) for future supply. 6. The Applicant is of the opinion that the vouchers purchased and further sold by it are nothing but a mean of making advance payments for future purchases of goods or services. Neither supply of goods nor supply of services emanate at the time of transfer of vouchers from one hand to another, it is also to be noted that GST on full value of the voucher is payable at the time of redemption of such vouchers by way of making supply of goods/ services against payment through these vouchers. 7. Further, Section 12 & 13 of the CGST Act, 2017 categorically provides for the Time of Supply in case of goods as well as Services respectively. As per the sections, Time of Supply in case of supply of vouchers will be considered as the date on which redemption of vouchers takes place (in case the supply is not identif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s for payment of consideration." In the given background, Applicant believed that the vouchers are neither a good nor a service therefore, no GST should be levied upon. 9. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. 10. The application for advance ruling was forwarded to Assistant Commissioner, Central Tax & Central Excise, Division-III, Noida Plot No. C-232A/2-232A/3, Sector-48, Noida 201301 vide letter dated 13.12.2023 to offer their comments/views/verification report on the matter. No views/comments have been offered from the concerned office. The Additional Commissioner, SGST, Gautambudha Nagar Zone vide letter 12.01.2024 has forwarded the Comments submitted by the Deputy Commissioner, SGST, Sector-10, Noida regarding AAR application of M/s. Payline Technology Private Ltd. the Deputy Commissioner, SGST, Sector-10, Noida has reported that the vouchers in the present case are taxable as per residual entry no. 453 of third schedule of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 (and similar not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... taxable under the GST. 17. The issue of payment instruments in India is regulated by the Reserve Bank of India (RBI, in short) in terms of the Payment and Settlement Systems Act, 2007 (PSS) and the Guidelines issued there under. As per the Policy Guidelines on Issuance and Operation of Prepaid Payment Instruments in India issued by the RBI on 1 July 2014. These guidelines lay down the eligibility criteria and the basic conditions for payment system operators involved in the issuance of Pre-paid Payment Instruments in the country. All persons authorized to operate payment systems and involved in the issuance of Pre-paid Payment Instruments in India shall comply with these guidelines. All persons proposing to operate payment systems and involved in the issuance of Pre-paid Payment Instruments shall seek authorization from the Department of Payment and Settlement Systems, Reserve Bank of India, under the Payment and Settlement Systems Act, 2007. Few definitions under these Guidelines are highlighted as under: 17.1 Issuer: Persons operating the payment systems issuing pre-paid payment instruments to individuals/organizations. The money so collected is used by these persons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such instruments that can be issued to any holder. 17.8 Merchants: The establishments who accept the PPIs issued by PPI issuer against the sale of goods and services. Thus, the pre-paid payment instruments (PPI, in short) that can be issued in India are classified under three categories: closed, semi-closed, and open system payment instruments. Closed system PPI's can be issued by any entity for making supply of goods or services, exclusively from the said entity. Such closed ended PPIs cannot be used for cash payments/settlements or withdrawals. Semi-closed PPIs can be issued by Banks and nonbanking entities. Its functioning is similar to that of a closed PPI, as the same can be used for purchase of goods and services and the same cannot be withdrawn. However, unlike a closed PPI, semi-closed PPI can be used for settlements. Therefore, they require prior approval from RBI for issuance. An open system PPI can be issued only by a Bank. They can be used for both cash settlements/payments and withdrawals. Looking at these Guidelines, it is imperative to mention that these are mainly applicable to the issuers of the PPIs, and not to its traders. 18. In the present ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....these vouchers are not used by the Applicant to settle an obligation and hence cannot be considered as "money". The Applicant is merely a trader of these vouchers, which are not used to settle an obligation. These vouchers could be termed as " money" only when it is redeemed by the beneficiary at the time of purchase of goods and /or services. The settlement of the obligation occurs at the time when the ultimate beneficiary uses the voucher to purchase goods and /or services. Therefore, the voucher in the hands of the Applicant cannot be termed as "money". 20. Next point of discussion is whether the vouchers are in the nature of actionable claims. As per the definition provided in section 2 (52) of the CGST Act 2017, "goods" includes "actionable claims". As per Sl. No. 6 of Schedule III of the CGST Act, actionable claims other than lottery, betting and gambling as being neither a supply of goods nor a supply of services. Therefore, only lottery, betting and gambling shall be treated as actionable claims which are goods under GST. All other actionable claims shall not be treated as either goods or services. Section 2 (1) of the CGST Act, 2017 states that "actionable claim" sha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot merely advance payment because the Applicant supplies these at a profit ; and its client is also getting credit of more than what it has paid. In the present case, as per the given illustration, the client has paid Rs. 96/- but it gets the benefit of Rs. 100/-. Further, in the Sodexo case (supra), the Hon'ble Supreme Court was deciding the taxability of the vouchers, under Municipal Corporation Act, which are printed for a particular customer, and which are used by the said customer for distribution to its employees and these vouchers are not transferrable at all. While deciding that these vouchers are not "goods", the Hon'ble Court in Para 24 of the judgment also observed, 24. We may mention here that the appropriate test would be as to whether such vouchers can be traded and sold separately. The answer is in the negative. Therefore, this test of ascertaining the same to be 'goods' is not satisfied. In contradiction to the Sodexo case where the vouchers were not freely transferrable; in the present case, since the vouchers are transferrable and are purchased and sold by the Applicant, test of ascertaining the same to be 'goods' is satisfie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ub-section (2) or sub-section (3) or sub-section (4), the time of supply shall (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the tax is paid. Even though sub-section (4) of section 12 of the CGST Act 2017 is a specific provision for supply of the vouchers, yet it is not applicable to the present case due to its language and is applicable to the issuer of the vouchers and not to its traders. Hence, we are of the considerate view that the time of supply shall be decided as sub-section (2) of Section 12 of the CGST Act 2017. 24. With regard to its valuation of vouchers, Rule 32(6) read with Section 15 of the CGST Act 2017 has been prescribed, which reads as under : 6) The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or services or both shall be equal to the money value of the goods or services or both redeemable against such token, voucher, coupon, or stamp. Since the said sub-rule is applicable to the issuer of the vouchers , the value of supply of vouchers in ....