Input tax credit— Section 16 of CGST Act— The present appeal has been filed against the Advance Ruling order..

The Appellant owns an e-commerce portal www.myntra.com and is a major Indian fashion e-commerce company. The Appellant is engaged in the business of selling of fashion and lifestyle products through the said e-commerce portal. In order to enhance their business, the Appellant proposes to run a loyalty programme where loyalty points will be awarded on the basis of purchases made by the customer on its e-commerce platform. 

The participation in the said program will be based on meeting the pre-defined eligibility criteria and subject to acceptance of the terms and conditions by the customer. The Appellant through its portal, would make the vouchers and subscription packages available to those customers who wish to redeem the loyalty points earned / accumulated.

The Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on the following question:

“Whether the Applicant would be eligible to avail the input tax credit, in terms of Section 16 of the CGST Act, 2017 on the vouchers and subscription packages procured by the Applicant from third party vendors that are made available to the eligible customers participating in the loyalty program against the loyalty points earned/ accumulated by the said customers?”

The AAR vide its order 

gave the following ruling in respect of the above questions:

The applicant is not eligible to avail input tax credit, in terms of Section 16 of the CGST Act 2017, on the vouchers and subscription packages procured by the applicant from third party vendors that are made available to the eligible customers participating in the loyalty program against the loyalty points earned / accumulated by the said customers, as the input tax credit is not available in terms of Section 17 (5) (h) of the CGST Act, 2017.

The issue for determination is whether the Appellant is eligible to avail input tax credit on the vouchers and subscription packages procured from a third-party vendor on payment of tax.

Held that— This authority reject the appeal filed by M/s Myntra Designs Pvt Ltd and uphold the Advance Ruling.