As per recent ruling given by Karnataka High Court in case of Premiere Sales Promotion Pvt Ltd, issuing gift vouchers/cash back vouchers is not supply and no GST will be levied on it. Then what about Myntra case in which AAR held that ITC on vouchers will not be available?
Case Details : GST- ITC on vouchers and subscription packages
Case Related To : MYNTRA DESIGNS PVT LTD
Declared By : KARNATAKA APPELLATE AUTHORITY FOR ADVANCE RULING
What Happened Exactly :
- The Appellant owns an e-commerce portal www.myntra.com. It is a major Indian fashion e-commerce company.
- The Appellant is engaged in the business of selling fashion and lifestyle products through the e-commerce portal.
- In order to enhance its business, the Appellant proposes to run a loyalty program. Where loyalty points will be awarded on the basis of purchases made by the customer on its e-commerce platform.
- Participation in the said program will be based on meeting the pre-defined eligibility criteria. And subject to acceptance of the terms and conditions by the customer.
- The Appellant through its portal, would make the vouchers and subscription packages available. For customers who wish to redeem the loyalty points earned/accumulated.
- The appellant sought an advance ruling as to whether the Applicant would be eligible to avail the input tax credit. In terms of Section 16 of the CGST Act, 2017 on the vouchers and subscription packages. It is procured by the Applicant from third-party vendors that are made available to the eligible customers participating in the loyalty program.
- AAR held that the appellant can not claim ITC as it blocked credit as per section 17(5)(h) of the CGST Act, 2017.
- Aggrieved by the ruling given by the AAR, the Appellant has filed this appeal.
Court's Decision :
- The decision of the Hon’ble Karnataka High Court in the case of M/s Premier Sales Promotions Pvt Ltd. It holds that ‘vouchers’ are neither goods nor services, is to be respected. As the law is applicable as of date until the decision is stayed or reversed by a higher court on an appeal by the Department.
- The primary condition for eligibility to input tax credit is that there should be an inward supply of either goods or services or both on which tax is charged by the supplier.
- As held by the Karnataka High Court in the M/s Premier Sales Promotions Pvt Ltd case, the vouchers are held to be neither goods nor services and cannot be taxed to GST. Therefore, when the vouchers intended to be procured by the appellant-assessee is neither goods nor service, the question of eligibility for input tax credit does not arise.
- The appeal is dismissed.