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TMI Blog2024 (7) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pay tax on goods shall arise at the time of supply, as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule Il. (2) Notwithstanding anything contained in sub-section (1), (a) activities or transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration (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 identifiable at the time of issuance of voucher.). In the instant case, supply is never identifiable at the time of purchase or sale of vouchers by the Applicant, Rather, the supply is identified only at the time of final redemption of the vouchers. Hence, the tax liability cannot arise at the time of sale of vouchers by the Applicant. 8. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 notification under the UPGST Act) at the rate of 9% CGST and 9% UPGST. 11. The applicant was granted a personal hearing on 30.01.2024 which was attended, online, by Shri Manoj Kumar Goyal, CA, the authorized representative of the applicant during which he reiterated the submissions made in the application of advance ruling. DISCUSSION AND FINDING 12. At the outset, we would like to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to make payment to the merchants who are part of the acceptance arrangement directly, or through a settlement arrangement. 17.2 Holder: Individuals/Organizations who acquire pre-paid payment instruments for purchase of goods and services, including financial services. 17.3 Pre-paid Payment Instruments: Pre-paid payment instruments are payment instruments that facilitate purchase of goods and services, including funds transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case, the Applicant is not the issuer of the voucher, but is the third party who buys and sells the vouchers. Before we examine whether these vouchers are in the nature of "goods" or "services" or neither as goods nor as services, let us go through the definitions of these No terms, as defined under CGST/UPGST Act 2017, as under - Sec. 2 (52) of CGST Act, 2017- "goods" means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not 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" shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882. Further, Section 3 of the Transfer of Property Act, 1882 states as: "Actionable Claim" 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 beneficia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 satisfied. 22. After deciding that the vouchers traded by the Applicant are "goods", we now proceed to examine whether the impugned transaction of trading of vouchers amounts to supply of "goods" or of "services" in terms of Section 7 (1) (a) of the CGST Act 2017. Section 7 (1) (a) of the CGST Act 2017 reads as under- Sec. 7. (1) For the purposes of this Act, the expression "supply, ' 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 the present case shall be decided as per sub-sections (1) (2) and (3) of section 15 of the CGST Act 2017, which shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. 25. So far as rate of tax on supply of vouchers is concerned, we rule 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) dt. 28.06.2017 (and similar notification under UPGST Act) at the rate of 9% CGST and 9% UPGST. 26. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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