1. What kind of activities would come under ‘transaction only in money’?
♦ Deposits in or withdrawals from a bank account.
♦ Advancement or repayment of principal sum on loan to someone.
♦ Conversion of Rs. 1,000 currency note into one rupee coins to the extent amount is received in money form.
2. Would a business chit fund come under ‘transaction only in money’?
In business chit fund since certain commission received from members is retained by the promoters as consideration for providing services in relation to the chit fund it is not a transaction only in money. The consideration received for such services is therefore chargeable to service tax.
3. Would the making of a draft or a pay order by a bank be a transaction only in money?
No. Since the bank charges a commission for preparation of a bank draft or a pay order it is not a transaction only in money. However, for a draft or a pay order made by bank the service provided would be only to the extent of commission charged for the bank draft or pay order. The money received for the face value of such instrument would not be consideration for a service since to the extent of face value of the instrument it is only a transaction in money.
4. Would debt collection services or credit control services be considered to be transaction only in money?
No. Such services provided for consideration are taxable.
5. What are actionable claims?
As per section 3 of the Transfer of Property Act, 1893 actionable claims means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent. Illustrations of actionable claims are –
♦ Unsecured debts
♦ Right to participate in the draw to be held in a lottery.
6. If an unsecured debt is transferred to a third person for a consideration would this activity be treated as service?
No. Since unsecured debt is an actionable claim, a transaction only in such actionable claim is outside the ambit of service.
In my opinion Gift vouchers is a transaction in actionable claim and have both the qualities of (i) a claim to an unsecured debt that the gift card issuer owes to the gift voucher holder (ii) It could also be an actionable claim in as much as the holder of the voucher has beneficial interest in movable property that he can get in exchange with that voucher.
What about sale of Gift Vouchers in exchange for cash?