In re Payline Technology Private Limited (GST AAAR Uttar Pradesh)
The Appellate Authority for Advance Rulings (AAAR), Uttar Pradesh, recently overturned a previous ruling by the Authority for Advance Ruling (AAR) regarding the applicability of Goods and Services Tax (GST) on the supply and trading of gift cards, vouchers, and prepaid vouchers by Payline Technology Pvt. Ltd. The ruling, given by the AAAR, redefines the treatment of such instruments under GST laws and specifies when and how tax should be applied.
Background
On February 20, 2024, an advance ruling (UP ADRG-43/2024) was issued by the AAR, holding that gift cards and prepaid vouchers supplied by Payline Technology were taxable as goods. However, this interpretation was challenged by Payline Technology in the AAAR, resulting in the new ruling issued in October 2024.
The AAAR’s recent decision holds that such instruments are indeed taxable under GST as goods, with the time of supply determined as per Section 12(4) of the CGST Act, 2017. The authority clarified that GST is applicable to the commission or discount earned through the trading of these instruments, with tax liability arising when the vouchers are traded or sold. Additionally, it ruled that the value of the service would be the margin between the purchase and selling price of the vouchers.
