Kalyan Jewellers India Ltd. v. Union of India

Quick Summary

Do gift vouchers count as a supply under GST? The High Court said: treat general gift vouchers as actionable claims. They are payment instruments, not goods or services by themselves.

Tax timing depends on how the voucher is designed. If it names a specific product or service, GST hits at issuance. If it is general (no specific supply), GST comes at redemption.

Issues

• Are Kalyan Jewellers’ gift vouchers a supply of goods or services?
• If taxable, does GST arise at issuance or at redemption?
• Do vouchers qualify as actionable claims under GST (Schedule III)?

Rules

• Vouchers as payment instruments: Not taxable as goods/services unless tied to specific supply at issuance.
• GST timing: Specific voucher → tax at issuance; general voucher → tax at redemption.
• Actionable claims (Schedule III): Excluded from GST to avoid premature taxation of rights to future payment.
• PPIs (RBI): Financial instruments governed by RBI directions; not sales by themselves.

Facts — Timeline

Business

Kalyan Jewellers sells jewellery nationwide; issues PPIs as gift vouchers/cards via stores and online partners.

2019 — AAR Ruling

AAR treated vouchers as goods. Tax: at issuance if specific; at redemption if general.

TNSAAAR Appeal

Held vouchers are payment instruments, not goods/services; repeated the timing rule (specific vs general).

Rectification

Requested term change “Gold Voucher” → “Gift Voucher”; no change in tax approach.

Writ to High Court

Company argued: vouchers are actionable claims (Schedule III) and RBI’s PPI regime implies tax at redemption.

Arguments

Judgment (Held)

• Gift vouchers are actionable claims → not taxable at issuance (Schedule III).
• No supply of goods/services happens until redemption fixes the actual supply.
• If a voucher is specific to a product/service, GST can arise at issuance.
• Petitioner must comply with RBI PPI directions, including handling of unredeemed value.
• Appellate ruling partly modified: the voucher itself is not taxable; only the underlying supply is.

Bottom line: Design decides tax point — specific vs general voucher.

Ratio Decidendi

A voucher is an actionable claim and not a supply until it locks onto a specific good/service. Therefore, GST arises at issuance only for specific vouchers; otherwise, at redemption.

Why It Matters

• Gives retailers a clear GST timing rule for vouchers.
• Aligns GST with financial instrument treatment for PPIs.
• Helps draft voucher terms (specific vs general) with tax certainty.

Key Takeaways

Mnemonic + 3-Step Hook

Mnemonic: “SGR”

• Specific → tax at issuance
• General → tax at redemption
• Right to future money → actionable claim

3-Step Hook (Exam Writing):

1. State rule: vouchers as actionable claims; timing depends on specificity.
2. Show how the voucher is drafted (specific vs general).
3. Seal conclusion: fix GST point accordingly.

IRAC Outline

Glossary

Actionable Claim

A right to receive money in future; excluded from GST (Schedule III).

PPI

Prepaid Payment Instrument regulated by RBI; includes gift cards.

Specific Voucher

Voucher earmarked for a particular good/service.

General Voucher

Voucher redeemable for multiple goods/services; supply fixed only at redemption.

FAQs

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