Myntra is facing a setback, the Karnataka Authority of Advance Ruling (AAR) said that input tax credit (ITC) does not be claimed on the vouchers and subscription packages procured from third-party vendors.
The petitioner, Myntra an Indian fashion e-commerce firm that owns the e-commerce portal. The petitioner does have the business of selling fashion and lifestyle products via the portal. The suppliers list their products on the petitioners portal with the purpose to sell the products.
On placing the order by the person the petitioner collects money, through them for the buying of the order via its portal, as per the capacity of the e-commerce portal after that it settles the amount to be paid with the supplier of the mentioned order in a particular duration.
A bench of M.P. Ravi Prasad and T. Kiran Reddy, sees that the petitioner, Myntra would not be qualified to claim an Input tax credit, under Section 16 of the CGST Act 2017, on the vouchers and subscription packages procured via the petitioner through 3rd party vendors which would be made available to the qualified customers who take part in the loyalty program with respect to the loyalty points earned by the customers, since GST Input tax credit would not available under Section 17(5)(h) of the CGST Act 2017.
AAR in conclusion, when any purchases are done from the customer’s side via an e-commerce portal as per the acceptance of the terms and conditions by the customer, authorizes the customer to earn loyalty points.
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“The applicant in the transaction recovers the full amount from the customer and gives the loyalty points free of cost. The loyalty points, in the applicant’s own admission, do not have any monetary value, are non-transferable, and cannot be converted to cash. The redemption of loyalty points, admittedly, involves no flow of consideration from the customer. The redemption of loyalty points by the customer for receiving vouchers from the applicant implies that the vouchers are issued free of cost to the customer and amounts to the disposal of vouchers (goods) by way of gift and is squarely covered under clause (h) of Section 17(5),” the AAR expressed.
