Case Title | Premier Sales Promotion Pvt ltd |
Court | Appellate Authority for Advance Ruling, Karnataka |
Honorable Judges | Member Ranjana Kha and Justice Shikha C |
Citation | 2021 (9) GSTPanacea 75 HC Karnataka ORDER NO. KAR/AAAR/11/2021-22 |
Judgement Date | 22-December-2021 |
Council for Petitioner | Mr Nagaraja |
Council for Respondent | Not applicable |
In favour of | Respondent |
Section | Section 100 and 101 of the CGST Act,2017 |
The Appellate Authority for Advance Ruling, Karnataka bench of Member Ranjana Kha and Shikha C, held that 18% GST payable on Supply of Vouchers.
FATCS OF THE CASE
The Appellant, Premier Sales Promotion Pvt Ltd. is a Private Limited Company involved in the business of providing marketing services in the area of sourcing and supply of E-Vouchers. The clients issue work orders to the Appellant from time to time for supply of vouchers having a predefined face value. The client issues such vouchers to their customers who in turn can redeem the vouchers at any of the specified merchants who have agreed to accept the vouchers as consideration for goods or services supplied by them. The Appellant undertakes to procure several types of vouchers such as ‘gift vouchers’, ‘cashback vouchers’ and ‘open vouchers’ which are redeemable at e specified merchants. The Appellant enters into agreement with the merchants for the purchase of the vouchers which are in turn sold to their clients.
The AAR has sought the advance ruling on the issue 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. If the answer to the above is in the affirmative, what would be the rate of tax at which this would be taxable. The Karnataka Authority of Advance Ruling (AAR) ruled that the 18% GST payable on the supply of Vouchers.
The Appellant has contended that the vouchers are akin to lottery tickets and the Supreme Court in the case of Sunrise Associates has held that lottery tickets are actionable claims.
COURT HELD
The coram of Ranjana Jha and Shikha C. held that the vouchers traded by the Appellant are goods and not actionable claims, we hold that the supply of vouchers by the Appellant is a supply of goods in terms of Section 7 of the CGST Act. “We are in complete agreement with the ruling given by the lower Authority on the aspect of value of the vouchers for the purpose of GST, the rate of tax and the time of supply of the vouchers by the Appellant. Since the Appellant is not the issuer of the voucher, the provisions of time of supply under Section 12(4) will not apply and the time of supply will be governed by the provisions of Section 12(5) of the CGST Act,” the AAAR said
Analysis of the Judgement
As per the above case we analyse that that prepaid payment instruments fall under the definition of vouchers neither goods nor services but instruments of consideration. It can be concluded that when a voucher or a gift card is issued to you by let’s say Amazon, you will not be liable to pay any GST on the voucher itself but only the underlying good or service. However, where the voucher is traded by a third party, the transactions become taxable under GST and all the compliances in this regard will follow.
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Premier Sales Promotion Pvt ltd
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AAAR Karnataka
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