the meaning of voucher cannot be determined by merely relying upon the definition of voucher given in Sec 2(118). The actual meaning can be reached after the critical analysis of conjoint reading of definition of ‘voucher’, taxability of advance money received, definition of goods/service which excludes money (and money includes any other instrument recognized by RBI i.e., PPI), and value of supply which excludes only invoice-linked post supply discount but includes non-government price-linked subsidies but does not include consideration received from third party.
One must maintain a difference between the price-linked subsidies and the receipt of consideration from third party. In price-linked subsidy, product is sold at lower price and the differential price is paid by third party, in later case instead, product is sold at normal price, but the payment is made by third person.
in view of the author, if an instrument fulfills the following characteristics, it shall be treated as voucher –
1. at least three parties are involved i.e., –
i. issuer – who issues the instrument to the beneficiary i.e., who will pay the consideration to the supplier on behalf of recipient to the extent of instrument’s value.
ii. beneficiary – who will actually buy the goods/service by adjusting the value of such instrument.
iii. Redeemer/supplier/obligor – who will supply the goods/services to the recipient by accepting the instrument as consideration as an obligation.
2. it carries an obligation (i.e., to be fulfilled in future) in hands of supplier to accept it as consideration only against supply of goods or service or both, i.e., cannot be converted into cash.
Note: Following are not to be treated as voucher –
So, any instrument issued by the supplier to the recipient cannot be treated as voucher i.e., supplier and issuer must be different.
Vouchers can be of three types:
Author’s view is, the reason behind separate taxability of voucher can be the definition of consideration which includes the payment received from third party. (author has no authentic view of Government regarding this)
while value of supply u/s 15 includes non-government price-linked subsidies but does not include the receipt of payment from third party.
So, specific provision for taxability of voucher has been inserted under the GST Law by sec 12 and 13 of CGST Act, 2017.
Before we come to the time of supply of voucher, it is to be understood that the voucher would be redeemed against the goods or services or both. Further, the tax liability (i.e., tax rate) may or may not be known at the time of issue of voucher. The time of supply provisions have been drafted by adopting these instances principally.
let’s come to the time of supply provisions related to the vouchers –
Case-1: where supply is identifiable at the time of issue of voucher
Time of supply shall be –
Case-2: where supply is not identifiable at the time of issue of voucher
Time of supply shall be –
So, the law has very clear-cut intent that where the tax liability is known at the time of issue of voucher, pay the tax at that time itself – no need to wait for actual supply.
In other words, it can be interpreted that the law is also very much clear in it’s intention to collect the tax on voucher itself and not on goods or services which shall finally be supplied against the redemption of the voucher.
Let’s take 2 examples
In both the above example the instruments are redeemable against goods.
Now, it is important to mention here that actionable claims other than lottery, betting and gambling are neither goods nor service (Schedule-III)
Meaning of actionable claims has to be understood by conjoint reading of definition given in sec 2(1) of CGST Act r.w. Sec 3 of Transfer of property Act, 1882 and the various interpretations given by the Hon’ble Supreme Court in the following cases –
To the best of the author’s knowledge and belief, the following principle can be drawn on the basis of the above definition and judgements:
Actionable claim is a right (unsecured debt or beneficial interest in movable property). A thin line to differentiate actionable claim and goods is the separate value different from underlying asset (i.e., movable property) and a ready Market for free transferability. If a right has the above two characteristics then it would become goods, if not, then it’s an actionable claim. however, if the right is related to availing the service, then it is neither goods nor actionable claim but to be categorized as service as the service does not constitute any beneficial interest in movable property.
So, now we shall come back on our examples. In the said example the instruments represent the ‘right’ and that ‘right’ in author’s opinion have no separate value different from underlying asset and hence to be classified as “actionable claim”.
Since such instruments are actionable claims other than lottery, betting and gambling, so in author’s opinion can be treated neither as “goods’ nor as “service”.
On the basis of above discussions following conclusion can be drawn: