Kalyan Jewellers India Ltd. – 2021 (50) G.S.T.L. 96 (App. A.A.R. – GST – Tamil Nadu)

Prepaid Payment Instruments (PPI) falls under the definition of vouchers neither goods nor services but instrument of consideration.

Fact: In the case, M/s KJIL (Kalyan Jewellers) is a Manufacturer and Trader in Gold and other Jewellery items through their retail outlets and also online portal. KJIL, as part of sales promotion, introduced the facility of issuing different types of Pre-Paid Instruments to their customers through their retail outlets as well as engaging third party online portal. When the money is paid by the customer, such a value is loaded onto the card electronically. PPIs issued by the applicant can be redeemed against purchase of any jewellery in any of the outlets of KJIL across India.

Issue: Whether gift vouchers are goods or services, its time of supply and applicable rate of tax.

Held: The AAAR Tamil Nadu held as under:

  • the gift voucher/ gift card is an instrument squarely covered under the definition of “payment instrument” under Payment and Settlement Act 2007. It is not a claim to a debt, nor does it give a beneficial interest in any movable property to the bearer of the instrument. In fact, if the holder of the gift card/ voucher loses or misplaces it and is unable to produce it before the applicants stores before the time limit specified on the card/ voucher, the instrument itself becomes invalid. Then the customer cannot use it to pay for any goods. Thus, it is not an actionable claim as defined under Transfer of Property Act. It is only an instrument accepted as consideration / part consideration while purchasing the goods from the issuer and the identity of the supplier is established in the PPI. Therefore, the PPIs under consideration squarely falls under the definition of ‘Voucher’ as defined in section 2(118) of CGST Act.
  • Vouchers under GST law is recognized as an instrument of consideration (non-monetary form) for future supply. Regarding classification of voucher, since voucher is only an instrument of consideration and not goods or services, the same is not classifiable separately but only the supply associated with the voucher is classifiable according to the nature of the goods or services supplied in exchange of the voucher earlier issued to the customer.
  • Since the gold voucher clearly indicates that the voucher can be redeemed for gold jewellery at a known rate of tax, gold voucher also falls under this category. Therefore, it is our view that the gold voucher (representing the underlying future supply of gold jewellery) would be taxable at the time of issue of the voucher.


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