Vouchers Are Neither Goods Nor Services, No ITC Available To Myntra: AAAR

The Karnataka Appellate Authority of Advance Ruling (AAAR) has held that input tax credit (ITC) is not available on the vouchers and subscription packages procured by Myntra from third-party vendors.The two-member bench of Ranjana Jha and Shikha C. has relied on the decision of the Karnataka High Court in the case of M/s Premier Sales Promotion Pvt Ltd versus Union of India & Ors., in which it was held that vouchers do not fall under the category of goods and services, and therefore, the issue and supply of vouchers would not attract GST.The appellant, Myntra, owns an e-commerce portal, www.myntra.com, and is a major Indian fashion e-commerce company. The appellant is in the business of selling fashion and lifestyle products through the said e-commerce portal. In order to enhance their business, the appellant proposes to run a loyalty program where loyalty points will be awarded on the basis of purchases made by customers on its e-commerce platform. Participation in the program will be based on meeting the pre-defined eligibility criteria and subject to the customer's acceptance of the terms and conditions. The appellant, through its portal, would make the vouchers and subscription packages available to those customers who wished to redeem the loyalty points earned.The appellant sought an advance ruling on the issue of whether input tax credit can be accessed on the vouchers and subscription packages procured by the applicant from third-party vendors and made available to the eligible customers participating in the loyalty program.The AAR held that the applicant is not eligible to avail the input tax credits on the vouchers and subscription packages procured by the applicant from third-party vendors that are made available to the eligible customers participating in the loyalty program against the loyalty points earned or accumulated by the said customers.The appellant challenged the ruling of the AAR. The appellant contended that the vouchers are not provided to the customers ‘free of charge." Although consideration is not explicitly mentioned, it would be accounted for in the commission charged from the sellers, on which applicable GST would be discharged.The AAAR, while modifying the AAR’s ruling, held that 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. The vouchers are held to be neither goods nor services and cannot be taxed under the GST. Therefore, when the vouchers intended to be procured by the appellant are neither goods nor services, the question of eligibility for input tax credit does not arise.Applicant’s Name: Myntra Designs Private LimitedDate: 24.02.2023Click Here To Read The Ruling

Vouchers Are Neither Goods Nor Services, No ITC Available To Myntra: AAAR

Mariya Paliwala

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