Treatment of Vouchers under GST

The sale of vouchers is primarily dealt in two limbs, to begin with the issuer of voucher who
is authorized by the Reserve Bank of India under the Payment and Settlement System Act,
2007 issues vouchers and furthermore, these vouchers are sold by issuers to traders at a face
value. The traders then transfer the beneficial ownership of the vouchers to third parties for a
consideration. Coming to Hecuba, sale of vouchers involves two main components
consideration and transfer of beneficial ownership. Consideration comes in play at the time
when issuer sales it to trader of voucher or customer directly for a consideration, on the other
hand, transfer of beneficial ownership comes where the ownership is transferred to the
ultimate beneficiary who redeems the voucher.
The GST law has defined the term ‘voucher’ as an instrument where there is an obligation to
accept it as consideration or part consideration for a supply of goods or services or both and
where the goods or services or both to be supplied or the identities of their potential suppliers
are either indicated on the instrument itself or in related documentation, including the terms
and conditions of use of such instrument. The legal conundrum arises in considering voucher
as supply of goods or services. The Hon’ble Supreme Court in SODEXO SVC INDIA
PRIVATE LIMITED VERSUS STATE OF MAHARASHTRA & OTHERS held that the
vouchers are not goods in relation to erstwhile service tax regime. The transaction of trading
in vouchers is not transactions of sale or supply of goods or services because vouchers are
payment instruments or consideration for sale or supply of goods or services at a future date.
The Karnataka Appellant Advance Ruling differentiated with the Apex Court’s view in the
case of IN RE: PREMIER SALES PROMOTION PVT. LTD and held that vouchers are
goods and are not money in the hands of trader of vouchers. They are merely payment
instruments recognized by RBI and traders trading in vouchers would be eligible to pay GST
on supply of vouchers as goods. The traders buy vouchers from entities authorized to issue
them and sells the same to his clients. In other words, the traders or merchants are trading in
vouchers. In the same ruling, the authority distinguished the supra case of Supreme Court to
the instant case on the ground that in supra case the facts of the case dealt with the issuer of
voucher not the trader of the voucher. However, in the instant the facts were in relation to
trading in vouchers.
The Tamil Nadu Appellant Advance Ruling in the case of IN RE: M/S. KALYAN
JEWELLERS INDIA LIMITED held that vouchers are not supply of goods or services.
There is no need of separate classification on vouchers but only the supply associated with
the voucher is classifiable according to the nature of the goods or services supplied in
exchange of the voucher earlier issued to the customer.
The issue is still ambiguous in relation to trading of vouchers by merchants, the Hon’ble
Supreme Court has saddled the dust in relation to issuance of vouchers by issuers, however
the second limb of trading in vouchers needs higher authority attention as there exist conflict
of opinion between state authorities. Both the Appellant Advance Ruling of Karnataka and
Tamil Nadu has adopted distinguished opinions on treating trading of vouchers as supply of
goods. In my opinion, the opinion adopted by Tamil Nadu Appellant Advance Ruling is more
reasonable as vouchers are non-monetary consideration and their rate of supply shall be
dependent on the nature of goods or services against which they have been redeemed. No tax
per se shall be levied on trading in vouchers.