Pre-paid vouchers can be treated at par with Sodexo vouchers or gift vouchers issued by Kalyan Jewellers and accordingly will attract GST at the rate of 18 per cent, Uttar Pradesh’s Authority for Advance Ruling (UPAAR) has ruled.

“Supply of vouchers by the applicant are taxable at the rate of 9 per cent CGST and 9 per cent UPGST,” UPAAR said in a ruling early this year, but made public now. Further, it said that supply of vouchers by the applicant are taxable as supply of goods. The applicant, Noida based Payline Technologies, is in the business of selling and purchasing gift cards, vouchers or 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.).

The vouchers are purchased by the applicant against the advance payments at discounted price. Later these are supplied to clients who can further hand them over to anyone. These vouchers are redeemable at any time by the customer or client by purchasing goods or services. The customer is required to pay applicable tax on goods or service at the time of redemption. He will redded himself for the ₹100 value. In all there are three categories of transactions – one by applicant, one by client and finally one by the end user (client or customer).

The applicant cited many rulings. In one such ruling, the Supreme Court had said that Sodexo Meal Vouchers cannot be treated as goods for the purpose of Octroi or LBT (Local Body Tax). Similarly, in the matter of Kalyan Jewellers, Tamil Nadu AAR had held that voucher per se is neither a good nor a service. “It is a means for payment of consideration,” it said while making it clear the no GST should be levied upon it.

However, after going through various facts presented and arguments made, the UPAAR said that in the Sodexo case, the vouchers were not freely transferable. However, in the present case, “since the vouchers are transferable and are purchased and sold by the Applicant, test of ascertaining the same to be ‘goods’ is satisfied. Similarly, in the Kalyan Jewellers case, the company was issuer of the voucher, but in the present case, applicant is the trader of voucher.”

Keeping all these in mind, UPAAR held the voucher to be sold by the applicant as the goods and accordingly said it will attract GST.

It may be noted that AAR rulings are applicable only on the applicant and jurisdictional tax office. However, it can be relied upon in similar matters. Also, on many occasions, AAR rulings have become the base for policy change.

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