Order Date – 16 January 2023

Parties: M/s Premier Sales Promotion Pvt Ltd Vs The Union of India, The principal Chief Commissioner of Central Tax and The Commissioner of Commercial Taxes Department of Commercial Taxes

Facts – 

• The Petitioner, M/s Premier Sales Promotion Pvt Ltd, engaged in the transactions of procuring Pre-paid Payment Instruments of Gift Vouchers, Cash Back Vouchers and E-Vouchers from the issuers and supplying them to its clients for specified face value.
• The clients issue such Vouchers to their employees in the form of incentive or to other beneficiaries under promotional schemes for use as consideration for purchase of goods or services or both as specified therein.

Issue –

• Whether the Pre-paid Payment Instruments or vouchers are taxable the time of supply or chargeable when goods and services are redeemed?

Order –

• The divisional bench of Hon’ble High Court observed that on mere transaction of money or actionable claim, no services are involved and therefore no tax is leviable. Vouchers are distributed to its employees or the customers which can be redeemed by them. These PPIs do not permit cash withdrawal, irrespective of whether they are issued by banks or non-banking Companies and they can be issued only with the prior approval of RBI.
• The transaction between the Petitioner and his clients is procurement of printed forms and their delivery. The printed forms are like currency. The value printed on the form can be transacted only at the time of redemption of the voucher and not at the time of delivery of vouchers to Petitioner’s client. Therefore, the issuance of vouchers is similar to pre-deposit and not supply of goods or services. Hence, vouchers are neither goods nor services and therefore cannot be taxed.