The Uttar Pradesh Authority for Advance Ruling (AAR), ruled that supply of vouchers is considered taxable as goods, and the value of such supply should be determined in accordance with Section 15 of the Central Goods and Service Tax (CGST) Act, 2017.
The applicant Payline Technology private Ltd was in the business of selling and purchasing Gift cards, vouchers, and pre-paid Vouchers (closed or semi-closed-ended vouchers against which goods or services can be purchased from specific brands on e-commerce platforms such as Amazon, Flipkart, etc.). These vouchers 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.
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The Applicant was of the opinion that the vouchers purchased and further sold by it are nothing but a means 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.
In this case, the Applicant purchases the vouchers by paying a consideration to the issuer. The vouchers are also sold to the clients of the Applicant for a consideration. The vouchers have both a value and an ownership, which is transferred by the issuer of these vouchers to the Applicant, and then to the ultimate beneficiary who redeems the voucher. No element of service is involved between the issuer of vouchers and the Applicant and also be- tween the Applicant and the purchaser. These vouchers are freely transferable. Therefore, the vouchers qualify to be considered as movable property and the “goods”. Further, the vouchers cannot be treated as “money”.
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In the present case, the Applicant was not the issuer of the voucher, but is the third party who buys and sells the vouchers. The bench examined 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 two terms, as defined under CGST/UPGST Act 2017, as under Section 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 attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.
The authority bench held that vouchers are only a means for advance payment of consideration for future supply of goods or services. It does not contain any element of supply in itself. Voucher, being an instrument used as consideration to settle on application, is a type of money, as long as such instrument is recognized by the Reserve Bank of India. Even if such a voucher is not recognized by the Reserve Bank of India, it would still form a means 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.
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AAR found that the Applicant purchases three types of vouchers: (i) Gift voucher, (ii) vouchers and (iii) pre-paid vouchers. These vouchers are purchased by the Applicant from entities on payment of a consideration and the vouchers are sold to their clients for a consideration. The Applicant is neither the issuing person nor the actual user of these vouchers.
The two member benches of the tribunal comprising Harilal Prajapati ( Member of AAR) and Amit Kumar ( Member of AAR) concluded that the supply of vouchers by the applicant are taxable at the rate of 9% CGST and 9% UPGST 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 the UPGST Act). Further held that 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.
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