The Karnataka Appellate Authority of Advance Ruling (AAAR), in the case of Myntra Designs Private Limited modified the decision of AAR, has observed, “input tax credit (ITC) is not available on the vouchers and subscription packages procured by Myntra from third-party vendors.” They relied on the judgement of the Karnataka High Court in the case of M/s Premier Sales Promotion Pvt Ltd v. Union of India & Ors., in which it was held that vouchers do not fall under the category of goods and services, and therefore, the issue and supply of vouchers would not attract GST.

It is pertinent to note that myntra is an e-commerce platform, dealing in the business of selling fashion and lifestyle products through the said e-commerce portal. In order to increase their sale it started a loyalty program where loyalty points will be awarded on the basis of purchases made by customers on its e-commerce platform. For eligibility, some conditions have to be fulfilled. The issue raised was whether input tax credit can be accessed on the vouchers and subscription packages procured by the applicant from third-party vendors and made available to the eligible customers participating in the loyalty program.

The AAAR observed that “The primary condition for eligibility to input tax credit is that there should be an inward supply of either goods or services or both on which tax is charged by the supplier. The vouchers are held to be neither goods nor services and cannot be taxed under the GST. Therefore, when the vouchers intended to be procured by the appellant are neither goods nor services, the question of eligibility for input tax credit does not arise.”