Ruling

Appellate Authority for Advance Ruling, Uttar Pradesh
Payline Technology (P.) Ltd., In re
DR. Nitin Bansal AND Pramod Kumar, MEMBER
Appeal Order No. 04/AAAR/2024
September 23, 2024

Background

The appellant, M/s Payline Technology Private Limited, is involved in the business of selling and purchasing gift cards, vouchers, and prepaid vouchers. The company sought an advance ruling on the taxability of these vouchers—specifically whether the vouchers themselves or the act of supplying them is taxable, and at what stage of the transaction the tax applies.

Earlier Ruling

The Authority for Advance Ruling (AAR) concluded that the supply of vouchers is taxable at 9% CGST and 9% UPGST, as per residual entry no. 453 of the Third Schedule of Notification No. 01/2017-Central Tax (Rate) dated June 28, 2017. The value of supply was to be determined as per Section 15 of the CGST Act.

The appellant appealed against this ruling, challenging the AAR’s interpretation of taxability and timing of supply.

Findings

1. Nature of Vouchers:
   
   The vouchers are definite instruments of value that are sold to clients after being purchased from issuers. Upon purchase, the appellant gains ownership of these vouchers, carrying both risk and reward, leading to the conclusion that they qualify as “goods.”
2. Tax Implications:
   
   Transactions involving the trading of vouchers/coupons where they earn a commission in the form of discounts are taxable. The supply of gift cards, vouchers, and prepaid vouchers arises as taxable transactions under the provision of the CGST Act.
3. Time of Supply:
   
   Per Section 12(4) of the CGST Act, the time of supply for vouchers is determined either by the date of issue of the voucher or the date of its redemption, depending on whether the supply is identifiable at the point of issue.
4. Delayed Appeal:
   
   The delay in filing the appeal was condoned based on sufficient cause demonstrated by the appellant, justifying their late filing due to issues in accessing the prior ruling.

Conclusion

• The prior ruling by the AAR is set aside.
• The supply of gift cards, vouchers, and prepaid vouchers is classified as taxable goods.
• GST applies to the commission earned from trading these vouchers, and the timing of supply corresponds to when the vouchers are either sold or redeemed.

Validity

This ruling is pertinent to the unique circumstances of the appellant’s case and is valid under the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, pursuant to the provisions of the Central Goods and Services Tax Act, 2017, and the Uttar Pradesh Goods and Services Tax Act, 2017.