Actionable Claim under GST

Notes on Clause (1) of Section 2 of the Central Goods and Services Tax Act, 2017. Actionable Claim – Lottery, Betting and Gambling is Goods under GST regime.

As defined under clause (1) of Section 2 of the Central Goods and Services Tax Act, 2017 (CGST 2017) the term “Actionable Claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882.

According to section 3 (Interpretation Clause) of the Transfer of Property Act, 1882, the term “Actionable Claim” means:

– A claim to any debt, other than a debt secured

  • by mortgage of immovable property or
  • by hypothecation or pledge of movable property, or

– Any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognize as affording grounds for relief,

whether such debt or beneficial interest be existent, accruing, conditional or contingent.

As per definition provided under Section 2(52) of CGST Act, 2017, “Goods” includes actionable claims. However, as per Sale of Goods Act, 1930, “Goods” means every kind of movable property other than actionable claims. Further, the definition of Goods does not include actionable claims as provided in the Central Sales Tax (CST) Act, 1956

Example of Actionable Claim:

Following are examples of actionable claim –

  • Lottery
  • Betting
  • Gambling
  • Debentures
  • Dividend on shares
  • Right shares
  • Negotiable instruments e.g. Bills of Exchange and Promissory Notes etc.
  • Bank guarantee
  • Fixed Deposit Receipt (FDR)
  • Insurance claims
  • Share in a partnership property

What is not an Actionable Claim?

  • A copyright
  • Right to sue
  • A decree for debt
  • Coupons and vouchers
  • A claim in share of profit
  • A right to claim for damage for breach of contract

Note that actionable claims are only applicable for Goods, and not for services. Goods, as described in the CGST Act, are every kind of movable property other than money, but includes actionable claims.

Lottery, Betting and Gambling are Goods under GST Regime

According to Paragraph 6 of Schedule III read with section 7 of CGST Act 2017, Actionable claims, other than lottery, betting and gambling shall be treated neither as a supply of goods nor a supply of services.

Further, Actionable Claim relating to lottery, betting and gambling alone will be regarded as ‘Goods’ since the definition of goods under Section 2(52) includes actionable claim. Therefore, only lottery, betting and gambling shall be treated as supplies under the GST regime. All the other actionable claims shall not be supplies.

A mark or name in respect of which actionable claim is available shall be deemed to be a registered brand name for the purposes of levy of 5% GST.

Note that 5 percent GST shall be applicable on all goods [other than fresh or chilled] and put up in unit container and,-

(a) bearing a registered brand name; or
(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily].

Notification No. 27/2017- Central Tax(rate), 28/2017-Central Tax(rate), 27/2017-Integrated Tax(rate), 28/2017-Integrated Tax(rate), 27/2017-Union Territory Tax(rate), 28/2017-Union Territory Tax(rate), issued on 22nd September, 2017 provide that 5% GST will apply if on brand name an actionable claim in court of law is available.

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