Actionable Claim - GST Ready Reckoner - GST

As per Section 2(1) of CGST Act, 2017 Actionable claim shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882. Keep in mind the following aspects Transfer of actionable claim can be with consideration or without consideration as per section 130 of the transfer Property Act, 1882. Actionable claim is also discussed under the Education Guide issued as on 20.06.2012 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 same 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 receive income accruing from a moveable property. It may be noted that accrual of income from a moveable property could be in the nature of a consideration for a taxable service, e.g. a hiring fees or a license fee accruing on hiring or licensing of a moveable property. In such a situation the service being provided in relation to such moveable property would not be covered in the exclusion clause. It is only if the beneficial interest in such property is transferred to another person for a consideration that the activity of transferring the beneficial interest would be covered. 2.8.11 Would vouchers that entitle a person to enjoy a service, for example a health club, be an actionable claim? No. Such a voucher does not create a beneficial interest in a moveable property but only entitles a person to enjoy a particular service for a single or specified number of times. 2.8.12 Would recharge vouchers issued by service companies for enabling clients/consumers to avail services like mobile phone communication, satellite TV broadcasts, DTH broadcasts etc be actionable claims? No. Such recharge vouchers do not create a beneficial interest in a moveable property but only enable a person to enjoy a particular service.