Kalyan Jewellers India Ltd. V/s Union of India {HIGH COURT OF MADRAS} :
Date of Order : 27-11-2023
Issue: Tvl.Kalyan Jewellers India Ltd. issued Gift Vouchers as part of a sales promotion strategy, sold both in their retail outlets and online. The question was about the GST implications regarding the time of supply for goods covered by these vouchers.
Ruling: The Madras High Court clarified the GST treatment of Gift Vouchers as follows:
- Identified Goods: If the Gift Voucher specifies particular goods or merchandise, or a specific value for identified goods, GST is payable at the time of issuance of the voucher itself. This is because there is a clear supply of identified goods or a commitment to supply goods of a specified value (as per Section 12(4)(a) of the CGST Act).
- Unspecified Goods: If the Gift Voucher does not specify particular goods or merchandise and allows redemption for any product from a range offered by the petitioner, GST becomes payable only at the time of redemption. This delay in tax payment until redemption aligns with Section 12(4)(b) of the CGST Act.
Elaboration: Gift Vouchers are treated differently under GST based on whether they are issued for identified or unspecified goods:
- Identified Goods: When a voucher clearly specifies a particular item or a class of items (like jewelry of a specific value), GST is considered payable at the time the voucher is issued. This is because the issuance itself represents a supply under GST law, involving a commitment to provide the specified goods or value.
- Unspecified Goods: Vouchers that do not specify the goods or allow for a wide range of choices (e.g., any product from a store’s inventory) postpone the GST liability until the actual redemption occurs. This approach ensures that GST is only levied when there is clarity on the actual goods or services being supplied at the time of redemption.
Conclusion: The court’s decision helps clarify the GST treatment of Gift Vouchers issued by businesses like Kalyan Jewellers. By distinguishing between identified and unspecified goods, it provides clarity on when GST should be accounted for—either at the time of voucher issuance or at the time of goods redemption. This distinction is crucial for businesses to comply with GST regulations accurately when implementing sales promotion schemes involving Gift Vouchers.
Relevant Sections : 12 of CGST Act.
