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TMI Blog2022 (9) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... o registered under the provisions of CGST/KGST Act 2017. The applicant is a major Indian fashion e-commerce company & owns an e-commerce portal (www.myntra.com); engaged in the business of selling of fashion and lifestyle products through the portal. The suppliers of such products, intending to sell their products through the applicant's portal list them on the portal and sell them to customers, who place their order using the applicant's portal. Once order is placed by the customer, the applicant collects money from them towards the purchase of the said order through its portal in the capacity of an e-commerce portal operator and settles the amount payable with the supplier of the said order within a specified period. 2.2 The Applicant, in order to incentivise the customers visiting the portal / e-commerce platform, proposes to run a loyalty program, by way of issuing points to the customers on the basis of purchases, effected by the customers from various sellers on the said platform. The participation in the proposed loyalty program will be on meeting the pre-defined eligibility criteria laid down by the applicant and the same will be subject to acceptance of the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Section 37 (1) of the Income Tax Act in computing the income chargeable under the head "Profits and gains of business or profession". 5.4 The vouchers procured by the applicant that are to be issued against the loyalty program could be of the following nature: a. Vouchers where the nature of supply is known at the time when the voucher is supplied. b. Vouchers where the nature of supply is not known at the time when the voucher is supplied. 5.5 The applicant quoting the definition of voucher in terms of Section 2(118) of the CGST Act 2017 submits that the time of supply of vouchers would be the date of issue of voucher and accordingly GST would be levied on such procurements made by the applicant where the supply is identifiable at the time of supply of voucher by the third party vendor, in terms of Section 12 (4) (a) of the CGST Act 2017. 5.6 Further, the subscription packages procured by the applicant, on payment of applicable GST, from the third party vendors will be in the nature of subscriptions to various applications, membership benefit under various applications and the like. The vendors charge GST by classifying the outward supply to the applicant under SAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the Act would also mean reference to the corresponding similar provisions in the KGST Act. 9. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing. 10. The Applicant proposes to run a loyalty program where loyalty points will be awarded on the basis of purchase made by the customer on their e-commerce platform. The participation in the said program will be based on meeting the pre-defined eligibility criteria and subject to acceptance of the terms and conditions by the customer. The applicant, through their portal, would make the vouchers and subscription packages available to those customers who wish to redeem the loyalty points accumulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrespective of being goods or not, will be offered only under contractual obligation for which consideration may not be explicitly specified by the applicant as the same will not be given free of charge and hence can't be termed as 'gift' to the customers. 13. The applicant primarily contends that they fulfill all the required conditions prescribed under Section 16 (1) of the CGST Act 2017 and the inward supply, i.e. procurement of vouchers & subscription packages, is classified as a service and thus Section 17 (5) (h) is not applicable & thereby allowing the customers to redeem the loyalty points earned for vouchers & subscription packages can't be termed as a 'gift' and hence the applicant is eligible to claim the ITC of GST paid on such procurement. 14. Now we proceed to examine as to whether the applicant is eligible to avail the input tax credit in terms of Section 16 (1) of the Act, ibid, on the vouchers and subscription packages procured by them from third party vendors and supplied to customers participating in the loyalty program against the loyalty points earned. In this regard, the relevant portion of sub-section (1) of Section 16 is reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the required qualities to qualify as a voucher. 16.1 Now we proceed to decide whether the inward supply of vouchers including subscription packages, by the third party vendors to the applicant, amounts to supply of goods or services. The vouchers printed on paper are undoubtedly goods, as they are tangible. Now the question is whether the e-vouchers, which are intangible, are also goods or not. In this regard, we invite reference to Section 2(52) of the CGST Act 2017, wherein the term "goods" has been defined to mean as under: Section 2(52) -goods means every kind of movable property other than money and securities but 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. 16.2 From the above definition it is seen that the term 'goods' is not restricted to tangible property, instead refers to every kind of movable property which is capable of being transmitted or supplied. Vouchers are a movable property, capable of being transmitted electronically or supplied physically, thus they qualify as 'goods'. 16.3 Further, the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. (vi) The applicant would not receive any consideration from the customer for the said vouchers and subscription packages and which will be provided only upon redemption of adequate loyalty points by the customer. (vii) The applicant, as per the accepted terms and conditions, will be under an obligation to provide the said vouchers and subscription packages to the participating customers who wish to redeem the loyalty points accrued to them. 18. It can be seen from the loyalty program that the applicant, on the basis of a particular transaction / purchase by the customer through their e-commerce platform and subject to acceptance of the terms and conditions of the applicant by the customer, allows the customer to earn loyalty points. The applicant in the said transaction recovers the full amount from the customer and gives the loyalty points free of cost. Further the said loyalty points, in the applicants own admission, do not have any monetary value, are non-transferable and cannot be converted to cash. The redemption of loyalty points, admittedly involves no flow of consideration from the customer. Thus redemption of loyalty points by the customer for receiving vouchers f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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