Nexus Innovatice Solutions Private Limited Vs Additional Commissioner of Central Taxes
Date: April 2, 2024
Subject Matter
Unreasoned Order Imposing GST on Vouchers is set aside for fresh consideration
Summary
The case law concerns Nexus Innovative Solutions Private Limited versus Additional Commissioner of Central Taxes, focusing on the imposition of Goods and Services Tax (GST) on vouchers. The petitioner, engaged in managing reward programs for corporate clients including the purchase and sale of gift vouchers, received a show cause notice regarding GST. The petitioner argued that they are intermediaries and should not be subject to GST on vouchers. The Madras High Court observed that the assessment order lacked reasoned analysis for rejecting the petitioner's contentions and set it aside. The Court directed the respondent to reconsider the issue and provide a reasonable opportunity for the petitioner to present their case, issuing a fresh order within two months.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 28.12.2023 is the subject of challenge in this writ petition only insofar as it dealt with the imposition of GST on vouchers.
2. The petitioner is engaged in the business of managing and implementing various reward programmes for its corporate clients. This includes buying and selling gift vouchers on behalf of clients such as Amazon. Pursuant to an audit report, a show cause notice dated 04.09.2023 was received by the petitioner and replied to on 04.10.2023 and 30.11.2023. The order impugned herein was issued thereafter.
3. Learned counsel for the petitioner referred to the definition of voucher in sub-section (118) of Section 2 of the Central Goods and Services Tax Act, 2017 (the CGST Act) and pointed out that a voucher is an instrument wherein there is an obligation to accept the same as consideration or part consideration for the supply of goods or services provided the goods or services to be supplied or the identities of the potential suppliers are indicated in the instrument or in related documents. He also referred to the time of supply in relation to vouchers by relying on sub-section (4) of Section 12. By pointing out that the petitioner is not a supplier of the goods underlying the vouchers and that the role played by the petitioner is limited to that of an intermediary, which procures vouchers from suppliers and thereafter sells such vouchers to its clients, he contended that the case of the petitioner is squarely covered by the judgment of Karnataka High Court in Premier Sales Promotion Pvt. Ltd. v. Union of India 2023(70) GSTL 345 (Kar). He also referred to and relied upon the recent judgment of this Court in Kalyan Jewellers India Limited v. Union of India and others, order dated 27.11.2023 in W.P.No.5130 of 2023.
4. He thereafter referred to the impugned order at internal page 71 thereof and pointed out that the assessing officer captured the contentions of the petitioner in brief and, thereafter, recorded conclusions unsupported by reasons.
5. Mr. B. Ramanakumar, learned senior standing counsel, accepts notice on behalf of the respondent. He submits that the issue raised by the petitioner is an issue to be examined by the appellate authority and not by this Court.
6. The operative portion of the impugned order, as regards the issue relating to vouchers, is as under:
“2. The assessee has given an elaborate reply in which they claim that
b. Supply of Unidentified Vouchers – Time of Supply would not attract
c. Notice acting in the nature of pure agent – Value of Vouchers should be excluded from
3. I find no validity in the argument of the assessee. Vouchers issued by the assessee are of the nature of actionable claims. Actionable claims, though included within the definition of goods under Section 2(52) of CGST Act. Hence It-follows that vouchers are subject to levy of tax under the GST Act.
Accordingly I confirm the demand of Rs.7,74,21,911/- (IGST-Rs.4,11,08,934/-, CGST- Rs.1,81,56,489/- & SGST-Rs.1,81,56,489/-) in this regard.”
7. The above extract indicates that the respondent summarized the contentions of the petitioner. After doing so, the sweeping conclusion that the argument was not valid is recorded. The respondent also records that vouchers are in the nature of actionable claims, which are included within the definition of goods under Section 2(52) of the CGST Act. Conspicuous by its absence in the impugned order, is the recording of reasons as to why the contentions of the petitioner were rejected. Since the impugned order is unreasoned in this respect, such order is unsustainable.
8. For reasons set out above, the impugned order is set aside only insofar as it relates to the imposition of GST on vouchers. As a consequence, this issue is remanded for re-consideration by the respondent. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh speaking order after duly taking note of and dealing with each contention raised by the petitioner in this regard. Such fresh order shall be issued within two months from the date of receipt of a copy of this order.
9. W. P.No.8845 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.9841 and 9842 of 2024 are closed.