[Cites 11, Cited by 0]
Bombay High Court
Neha Piyush Shsh vs Union Of India on 12 March, 2026
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
Digitally
2026:BHC-OS:6760-DB
signed by
PRAJAKTA 906-WP 4645-24.DOC
PRAJAKTA SAGAR
SAGAR VARTAK
VARTAK Date:
2026.03.18
10:44:42
+0530
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 4645 OF 2024
Neha Piyush Shah ...Petitioner
Versus
Union of India & Anr. ...Respondents
_________
Mr. Prakash Shah, Senior Advocate, with Mr. Saurabh Godbole i/b. Mr. Sahil
Mahajan for Petitioner.
Mr. Karan Adik for Respondents.
__________
CORAM: G. S. KULKARNI &
AARTI SATHE, JJ.
DATE: 12 MARCH 2026
P.C.
1. We have heard Mr. Prakash Shah, learned senior counsel for the petitioner,
and Mr. Adik, learned counsel for the respondents.
2. This petition challenges the Order-in-Original dated 26 December 2023,
whereby the demand against the petitioner has been confirmed in terms of the
following directions:-
"7.8 Difference in P&L and GST Turnover:
(xv) I confirm the demand of GST amounting to Rs. 12,66, 19,880/-
(Rupees Twelve Crore Sixty Six Lakhs Nineteen Thousand Eight
Hundred and Eighty Only), under the provisions of Section 73 of CGST
Act, 2017 read with corresponding section of MGST Act, 2017 and
relevant sections of IGST Act, 2017, as detailed in 7.8 above along with
applicable interest under section 50 of the CGST Act, 2017 on M/s.
Neha Piyush Shah (Trade Name - Neoniche).
(xvi) I impose a penalty of Rs. 1,26,61,988/- {Rupees One Crore
Twenty Six Lakhs Sixty One Thousand Nine Hundred and Eighty Eight
only), under section 73 read with Section 122(2)(a) of the CGST Act,
2017, read with corresponding section of MGST Act, 2017 and relevant
section of IGST Act, 2017 on M/s. Neha Piyush Shah (Trade Name -
Neoniche).
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3. At the outset, Mr. Shah has stated that there are other demands in the
impugned order in respect of which the petitioner intends to prefer an appeal.
Accordingly, the scope of the present petition is confined only with regard to the
order by which the demand of Rs. 12,66,19,880/- being confirmed against the
petitioner under the provisions of Section 73 of CGST Act, 2017 read with the
corresponding section of MGST Act, 2017.
4. The petitioner is an individual who was dealing with vouchers. The term
"voucher" has been defined under the provisions of Section 2 (118) of the CGST
Act, which reads thus:-
"(118) "voucher" means an instrument where there is an obligation to
accept it as consideration or part consideration for a supply of goods or
services or both and where the goods or services or both to be supplied or
the identities of their potential suppliers are either indicated on the
instrument itself or in related documentation, including the terms and
conditions of use of such instrument."
5. Respondent no.2, however, applying the provisions of Section 7 of the
CGST Act, has held that the petitioner dealing in vouchers, would amount to the
petitioner dealing in goods and has accordingly, confirmed the said demand on
the petitioner's turnover. Mr. Shah submits that such approach on the part of
respondent no.2 was not correct, particularly taking into consideration the
definition of 'money' as defined under Section 2(75) of the CGST Act, which
reads thus:-
""money" means the Indian legal tender or any foreign currency, cheque,
promissory note, bill of exchange, letter of credit, draft, pay order,
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traveller cheque, money order, postal or electronic remittance or any
other instrument recognised by the Reserve Bank of India when used as a
consideration to settle an obligation or exchange with Indian legal tender
of another denomination but shall not include any currency that is held
for its numismatic value;
6. Mr. Shah further submits that the issue of a registered person dealing in
vouchers, was the subject matter of consideration before the Karnataka High court
in case of M/s. Premier Sales Promotion P Ltd V/s. Union of India (Writ petition
No 5569 of 2022). The Division Bench of the Karnataka High Court,
considering the decision of the Supreme Court in Sodexo SVC India Private Ltd.
v. State of Maharashtra1, held that the transactions of the assessee with its clients,
involving vouchers, amounted to procurement of printed forms and their
delivery. The Court observed that such printed forms are akin to currency, and
the value printed on the form can be transacted only at the time of redemption of
the voucher and not at the time of delivery of vouchers to the assessee's clients. It
was hence held that the issuance of vouchers is similar to a pre-deposit and not a
supply of goods or services. It was also held that vouchers are neither goods nor
services and therefore cannot be taxed.
7. Mr. Shah submits that apart from the decision of the Karnataka High
Court, and considering the settled position of law, the Government issued
Circular No. 243/37/2024-GST dated 31 December 2024. The said circular was
issued after references were received from the trade and industry as well as field
formations seeking clarity on various issues relating to vouchers, more particularly
whether transactions in vouchers constitute supply of goods and/or services,
1 2016 (331) E.L.T. 23 (S.C.)
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whether GST is leviable on trading of vouchers by distributors/sub-distributors,
and whether unredeemed vouchers (breakage) are taxable. In view of the
difficulties faced by trade and industry, and in order to ensure uniformity in the
implementation of the provisions of law across field formations, the Board, in
exercise of its powers under Section 168(1) of the CGST Act, 2017 issued the said
clarification. The relevant paragraph in the said circular is paragraph 3.7, wherein
the Board clarified that irrespective of whether a voucher is covered as a prepaid
instrument recognized by RBI or not, a voucher is just an instrument which
creates an obligation on the supplier to accept it as consideration or part
consideration and accordingly, transactions in vouchers themselves cannot be
considered either as a supply of goods or as a supply of services. It was further
clarified that the supply of underlying goods and/or services, for which vouchers
are used as consideration or part consideration, may be taxable under GST. As
rightly pointed out on behalf of the Revenue, paragraph 4.3 of the said circular
clarifies that where vouchers are distributed through distributors/sub-
distributors/agents on a commission/fee basis, such distributors/sub-distributors/
agents do not operate autonomously, do not own the vouchers and only act as
agent of the voucher issuer. In such cases, GST would be payable by such
distributor/sub-distributor/agent, acting as an agent of the voucher issuer, " on the
commission/fee" or any other amount by whatever name called, for such purpose,
as a supply of services to the voucher issuer. There is also a further clarification in
paragraph 5.1 in relation to additional services such as advertisement, etc. which
provides that where such services are supplied, the service fee/service
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charge/affiliate charge or any other amount charged for the supply of such
additional services to the voucher issuer, as per the terms of the contract or
agreement, would be liable to GST at the applicable rate in the hands of the said
service provider. The relevant paragraphs of the circular are required to be noted
which read thus:-
"3.7 Therefore, it is clarified that irrespective of whether voucher is
covered as a pre-paid instrument recognized by RBI or not, the voucher is
just an instrument which creates an obligation on the supplier to accept it
as consideration or part consideration and the transactions in voucher
themselves cannot be considered either as a supply of goods or as a
supply of services. However, supply of underlying goods and/or services,
for which vouchers are used as consideration or part consideration, may
be taxable under GST.
Issue 2 -What would be the GST treatment of transactions in vouchers by
distributors/sub-distributors/agents etc.?
4.3 Where vouchers are distributed using distributors/sub-
distributors/agents commission/fee basis: In such cases, the transactions
between the voucher issuer and the distributors/sub-distributors/agents
are on principal-agency basis. These arrangements, as per
contract/agreement between distributor/sub-distributor/agents and the
voucher issuer may specify a set of obligations on such agents such as
marketing & promotion and other related support activities for
distribution of vouchers against a commission/fee or any other amount
by whatever name called, for such purpose. In such cases,
distributors/sub-distributors/agents do not operate autonomously, do not
own the vouchers and only act as agent of the voucher issuer. In such
cases, GST would be payable by such distributor/sub-distributor/agent,
acting as an agent of the voucher issuer, on the commission/fee or any
other amount by whatever( name called, for such purpose, as a supply of
services to the voucher issuer.
Issue 3 -What would be GST treatment of additional services such as
advertisement, co-branding, marketing & promotion, customization
services, technology support services, customer support services etc.
5.1 There may be cases where additional services such as advertisement,
co-branding, customization services, technology support services,
customer support services, etc. are provided by either the distributor/sub-
distributor or by another person to the voucher issuer against a service
fee/service charge/affiliate charge or any other amount, by whatever name
called, as per contract/agreement between such service provider and the
service recipient (voucher issuer). In such a case, the said service
fee/service charge/affiliate charge or other amount for supply of such
additional services to the voucher issuer as per the terms of
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contract/agreement, would be liable to GST at the applicable rate in the
hands of the said service provider."
8. Mr. Shah would next submit that, considering the provisions of the
aforesaid circular, the approach of respondent no.2 would not be correct,
particularly when the following observations have been made in the impugned
order-in-original so as to tax the turnover:-
"7.8 Difference in P&L and GST Turnover:
(i) The noticee has contended that the difference is due to voucher
sale and purchase and requested that the same is not leviable under GST.
(ii) In this regard, I find that the sale and purchase of vouchers are
falls under the scope of supply as prescribed in Section 7 of CGST Act,
2017. Further, I find that the noticee has not submitted any valid
supporting documents or any other substantial details, under which it can
be established that GST is not leviable on their sale and purchase of
vouchers. Further, the noticee has not submitted any documentary
evidence (Vouchers Sale / Purchase Ledgers and Invoice copies) regarding
difference of their turnover in P&L and GST returns actually pertains to
the voucher sale or some other reasons. In absence of supporting
documentary evidences, I do not find any merit in the noticee's claim and
hold that the noticee's contention cannot be accepted. Hence, I hold that
the noticee is required to pay the GST amounting to Rs. 12,66,19,880/-
for the period F.Y. 2017-18 to 2019-20."
9. In such context, there is much substance in the submissions of Mr. Shah
that the aforesaid observations made in the impugned order-in-original, do not
appear to be in consonance with what has been provided for in the circular dated
31 December 2024 and the position in law as discussed hereinabove.
10. Prima facie, it appears that insofar as the petitioner is concerned, who is
receiving commission in dealing with vouchers, such commission/fees alone
would be liable to GST and not the entire turnover. Thus, considering the
position in law as clarified in the said circular, in our opinion, it would be
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appropriate that the issue, to that extent needs to be examined afresh by
respondent no.2.
11. There is another significant aspect which has been pointed out to us by Mr.
Shah, that the amendment brought about to Section 12 of the CGST Act by the
Finance Act, 2025, (notified on 17 September 2025) sub-section (4) of Section
12 has now been deleted. Section 12 provides for the 'time of supply of goods'
and in such context, sub-section (4) as it earlier stood, provided as follows in
regard to the supply of vouchers:-
"(4) In case of supply of vouchers by a supplier, the time of
supply shall be-
(a) the date of issue of voucher, if the supply is
identifiable at that point; or
(b) the date of redemption of voucher, in all other
cases."
12. In this view of the matter, the impugned order-in-original dated 26
December 2023, to the extent of the operative portion noted hereinabove
confirming the demand of Rs. 12,66,19,880/-, needs to be quashed and set aside,
and the proceedings to such extent need to be remanded to respondent no.2, for a
denovo consideration, for an appropriate order to be passed in accordance with
law, after granting an opportunity of hearing to the petitioner.
13. We permit the petitioner to file an additional reply with respondent No.2
within a period of 10 days from today.
14. Respondent no.2 shall fix a convenient date for hearing within a period of
15 days from today and make an endeavour to pass an order within a period of
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four weeks from the date of hearing. All contentions of the parties in that regard
are expressly kept open.
15. It is clarified that, insofar as the other aspects of the impugned order are
concerned, all contentions of the parties are expressly kept open, including the
contention of the petitioner to assail that portion of the order in an appropriate
appeal. If such appeal is filed within a period of four weeks, the same shall be
decided without objection on the ground of limitation, as the petitioner has been
bona fide pursuing the present petition.
16. Writ Petition is disposed of in the aforesaid terms. No costs.
(AARTI SATHE, J.) (G. S. KULKARNI, J.)
12 March 2026
