TMI Blog2021 (12) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... when the ultimate beneficiary uses the voucher to purchase goods and/or services. The definition of money also makes it clear that it is only when the payment instrument is used as consideration to settle an obligation, does it qualify as 'money'. This occurs only when the voucher is redeemed. Until then it is just an instrument recognised by the RBI but is not money'. Therefore, the voucher in the hands of the Appellant cannot be termed as 'money'. In the instant case, the definition of goods in the CGST Act is much more explicit and states clearly what goods mean, what is excluded from the meaning of goods and what is included in the meaning. Further, the nature of the transaction in the case before us is different from the nature of the transaction by Sodexo in as much as the Appellant is clearly not the issuer of the vouchers nor is he authorized by RBI to issue vouchers. The Appellant is buying vouchers from entities authorized to issue them and is selling the same to his clients. In other words, the Appellant is purely trading in vouchers - the vouchers being traded by the Appellant are in the nature of goods. The supply of vouchers by the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In order to obtain a ruling on the applicability of GST on transactions of sale of vouchers, the Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on the following question: (a) Whether the vouchers themselves, or the act of supplying them is taxable, and at what stage, for each of the three categories of transactions undertaken by the Appellant? (b) If the answer to the above is in the affirmative, what would be the rate of tax at which this would be taxable i.e what category would this be taxed under? 5. The AAR vide its order KAR ADRG No 37/2021dated 30 th .July 2021 held as under: The supply of vouchers is taxable and the time of supply in all three cases would be governed by Section 12(5) of the CGST Act, 2017 The rate of tax on the supply of vouchers is 18% GST as per entry no. 453 of Schedule III of Notification No. 01/2017-Central Tax (R) dated 28.06.2017. 6. Aggrieved by the ruling given by the AAR, the Appellant has filed this appeal on the following grounds. 6.1. The Appellant submitted that in all the three types of vouchers, the supplier indicates his willingness to supply goods or services or both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acilitate the purchase of goods and services against the value stored on such instruments; and Merchants are defined as establishments who have a specific contract to accept the PPIs issued by the PPI issuer (or contract through a payment aggregator/payment gateway) against sale of goods and services; Para 7.7 of the Master Directions also stipulates that PPIs may be issued as cards, wallets and any such form/instrument which can be used to access the PPI and to use the amount therein; that as per Para 9.1(i), PPIs upto ₹ 10,000/- can be issued by accepting the minimum details of the PPI holder, which would include mobile number verified with OTP and self-declaration of name and U1N of any officially verified document as defined in the PML Rules, 2005. While a maximum of ₹ 1,00,000/- is stipulated for the total amount loaded into a PPI during one financial year, there is no separate limit on the purchase of goods and services using PPIs. 6.4. The Appellant submitted that in their case, the vouchers satisfy all the above conditions and are squarely covered within the ambit of prepaid payment instruments, which is nothing but money or consideration for the future sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers. The also submitted that the AAR has erred in classifying the vouchers as goods for the obvious reason that the vouchers are only instruments which carry along with them a promise to pay or promise to supply goods and services and the ultimate supply of goods or services happens only when the final customer makes use of such vouchers by following the procedures and conditions attached to it; that whenever the vouchers are exchanged between the supplier of e-vouchers and buyer of e-vouchers, no supply of goods or services happens; that the AAR has failed to appreciate that the RBI has categorically stated that closed PPI and semi-closed PPI are recognised class of pre-paid instruments; that if the AAR itself admits that the vouchers are instruments of payment, then they ought to fall within the definition of money, which is outside the purview of GST. 6.6. The Appellant submitted that the voucher being defined as an instrument where there is an obligation to accept it as consideration for supply of goods or services to be supplied to the beneficiary, is an actionable claim; that the decision in the case of H Anraj Etc vs Government of Tamil Nadu relied upon by the AAR i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance Ruling in the case of Kalyan Jewellers India Ltd - 2021 (50) GSTL 96 (AAAR-TN) wherein it was held that Voucher, being an instrument used as consideration to settle an application, is a type of money, as long as such instrument is recognized by the Reserve Bank of India; that when a voucher is issued, though it is just a means of 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. Regarding classification of voucher, the Tamil Nadu AAAR held that since voucher is only an instrument of consideration and not goods or services, the same is not classifiable separately but only the supply associated with the voucher is classifiable according to the nature of goods or services supplied in exchange of the voucher earlier issued to the customer. 6.9 Since the vouchers are not classifiable as goods or services by virtue of them being simply payment instruments or consideration for the supply of goods or services at a future date, the Appellant prayed that the vouchers are not liable to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied that they Appellant is not the issuer of the voucher and is also not authorized by RBI to issue any voucher; that the Appellant is merely trading in the vouchers issued by the issuer. Further, they also submitted that the provisions of time of supply of voucher as given in Section 12(4) of the CGST Act, pertains to the time of supply of the underlying goods and services and does not mean that the voucher is 'goods'. In view of the above, they submitted that the lower Authority has wrongly interpreted their activity as a transaction in goods and prayed that the same may be set aside. 7.2. In the additional written submissions vide letter dated 6th December 2021, the Appellant summarised the submissions made during the personal hearing and also submitted that they are providing marketing service by sourcing and supply of vouchers; that the Appellant is purchasing Gift Vouchers, Cash Back Vouchers and Multiple Option Vouchers (For Ex: Amazon E-Gift Vouchers, Shoppers Stop E-Gift Card, Sony Pictures E-Gift Vouchers, Makemy Trip E-Gift Vouchers, Flipkart E-Gift Vouchers, Dominos E-Gift Voucher, Big Bazar E-Gift Vouchers, Big Basket E-Gift Vouchers, Myntra E-Gift Vouchers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cher as a claim to a debt. The Voucher gives the beneficiary a specific right to the goods or services underlying it. Therefore, the vouchers answers to the definition of 'actionable claim as defined in Section 2 (1) of the CGST Act, 2017 read with Section 3 of the Transfer of Property Act, 1882. The judgment of the Constitution Bench of the Hon Supreme Court in the case of Sunrise Associates (supra) which has analyzed the elements in actionable claim and has held that the sale of lottery ticket constitutes a transfer of an actionable claim is applicable to the facts of the case. The Appellant therefore prays that the ruling of the lower Authority be set aside and it be held that the vouchers by themselves are not goods or services; that the goods or services supplied against the vouchers are classifiable and attract levy of tax as applicable to such goods or services supplied; that the time of supply of goods covered by the vouchers are to be determined in terms of Section 12 (4) and in respect of services in terms of Section 13 (4) of the CGST Act, 2017. DISCUSSIONS AND FINDINGS 8. We have gone through the entire case records and considered the submissions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 7(1)(a) of the CGST Act and it amounts to a supply of goods. The lower Authority has also held that the vouchers are not actionable claims' in as much as they are not debt and have an expiry period. The Appellant has assailed this finding on the grounds that the voucher by definition is a consideration for the purchase of goods or services and hence consideration itself cannot be held as goods . 10. The term voucher has been defined in Section 2(118) of the CGST Act to mean an instrument where there is an obligation to accept it as consideration or part 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. Thus, vouchers are a form of payment instruments. The issue of payment instruments in India is regulated by the Reserve Bank of India in terms of the Payment and Settlement Systems Act, 2007 (PSS Act) and the Guidelines issued thereunder. In conformity with the PSS Act, the RBI has allowed for the issuance of pre-paid instrum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash back vouchers in E-wallets and electronic based multi options voucher. A reading of the RBI guidelines denotes that the transactions in vouchers can be of different types: The issuer of the voucher and the supplier of the redeemed goods and/or services can be the same person. This is categorised as a closed PPI and does not require the authorization of the RBI. The issuer of the voucher and the supplier of the redeemed goods and/or services are different persons: In this scenario, the issuer of the voucher, who is authorized by the RBI will sell the vouchers to customers and also enter into contractual agreements with participating suppliers to accept the vouchers for redemption of goods and/or services by the customers. On redemption of the voucher, the supplier will seek reimbursement from the issuer on the basis of the vouchers accepted as payment for the redeemed goods and/or services. This is a semi-closed PPI and requires the issuer to be authorized by the RBI. Vouchers sold through a third-party- In this case, the issuer of vouchers may sell vouchers to third-parties who buy and sell the vouchers. The third-parties who buy and sell the vouchers on a prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value The vouchers in question are undoubtedly payment instruments recognised by RBI. The question is however, whether these vouchers can be considered as 'money'. The finding of the lower Authority is that these vouchers are not used by the Appellant to settle an obligation and hence cannot be considered as 'money' ; that it takes on the colour of money only when it is redeemed by the beneficiary at the time of purchase of goods and/or services. We agree with this finding. The voucher in the hands of the Appellant, does not settle an obligation but rather creates an obligation. The settlement of the obligation occurs at the time when the ultimate beneficiary uses the voucher to purchase goods and/or services. The definition of money also makes it clear that it is only when the payment instrument is used as consideration to settle an obligation, does it qualify as 'money'. This occurs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the city limits for consumption, use or sale therein. For this purpose, the Court referred to the definition of 'goods' as given in Section 2 (25) of the Maharashtra Municipal Corporation Act under which the Municipal Corporation is entitled to levy and collect Local Body Tax and Octroi. The definition of 'goods' as per the said Act reads as goods includes animals In this context, the Court has held that Sodexo Meal Vouchers cannot be treated as 'goods' for the purpose of levy of Octroi or LBT. In the instant case, the definition of goods in the CGST Act is much more explicit and states clearly what goods mean, what is excluded from the meaning of goods and what is included in the meaning. Further, the nature of the transaction in the case before us is different from the nature of the transaction by Sodexo in as much as the Appellant is clearly not the issuer of the vouchers nor is he authorized by RBI to issue vouchers. The Appellant is buying vouchers from entities authorized to issue them and is selling the same to his clients. In other words, the Appellant is purely trading in vouchers. Since the material facts are patently different, the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ims which are goods under GST. All other actionable claims shall not be treated as either goods or service. Section 2(1) of the CGST Act states that actionable claim shall have the same meaning as assigned to it in Section 3 of the Transfer of Property Act, 1882. Section 3 of the Transfer of property Act 1882 defines actionable claim as a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in possession either actual or constructive, of the claimant, which the civil courts recognize as affording grounds of relief whether such debt or beneficial interest be existent, accruing or conditional or contingent . 17. When we analyse the above definition, it is clear that the term actionable claim has got two limbs. One is that it is a claim to any unsecured debt. The second limb is about claim to beneficial interest in movable properties not in actual or constructive possession of the claimant which shall be recognized as affording ground for relief by a civil court. These two categories of claims can be existent, future, contingent or conditiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the draw. Further, for the purpose of levy of sales tax, lottery ticket could be regarded as 'goods' properly so called insofar as it entitled its holder to take part in the draw. In other words, lottery ticket, to the extent it evidenced the right to claim the prize, was not 'goods' but an actionable claim and, therefore, expressly excluded from the definition of 'goods' under the sales tax laws. A transfer of it was consequently not a sale. The lottery ticket per se had no innate value. The Supreme Court held that the Delhi High Court (lower court in Sunrise case) was, therefore, plainly in error in interpreting and following Anraj. We find that the plea of the Appellants that the vouchers are akin to lottery tickets is not tenable. While the lottery tickets have no innate value, it is not so in the case of vouchers. The vouchers have a definitive value and are traded for a consideration. The value of the voucher is the extent to which a beneficiary can claim possession of goods and/or services from the specified suppliers. Therefore, while we agree that the reliance placed by the lower Authority on the H.Anraj case to hold that the vouchers are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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