Actionable claim :
Definition of ‘goods’ specifically includes ‘actionable claim’.
“Actionable claim” shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 – section 2(1) of CGST Act.
Actionable claims, other than lottery, betting and gambling are neither as a supply of goods nor a supply of services – Schedule III of CGST Act read with section 7(2)(a) of CGST Act.
Thus, only activities relating to lottery, betting and gambling will be subject to GST.
As per section 3 of Transfer of Property Act, 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 to any beneficial interest in movable property not in possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent,
accruing, conditional or contingent.
Section 130 of Transfer of Property Act provides that an actionable claim may be assigned for value.
Basically, actionable claim means a claim for any amount receivable (debt) or claim for benefit of any movable property not in possession for which relief can be claimed in Civil Court. Such claim can be assigned/transferred.
Insurance claim is ‘actionable claim’ – Transfer/assignment of unsecured debt is assignment/transfer of ‘actionable claim’. Claim to secured debt is not actionable claim. Thus, transfer of secured debt through securitization is not assignment of ‘actionable claim’. However, it is mere transaction in money or mere transfer of title of immovable property and hence not a ‘service’.
Debt for which action is necessary to realise can only be said to be an actionable claim. Where no action is necessary to realise the debt, it cannot be said to be actionable claim – Jindal Drugs v. State ofMaharashtra 2004 (178) ELT 105 = 17 VST 164 (Bom HC DB) [In this case, it was held that DEPB credit is not actionable claim as no action in law is necessary for its realisation. In case of transfer of DEPB, it confers upon the transferee the immediate right to pay duty (through DEPB credit).
In Jugal Kishore v. Raw Cotton Co. AIR 1955 SC 376, it was held that a Judgment Debt or Decree is notan actionable claim as no action is necessary to realise it.
An actionable claim would include right to recover insurance money or a partner’s right to sue for account of adissolved partnership or right to claim benefit of a contract not coupled with any liability – UOI v. Sri SaradaMills (1972) 2 SCC 877 = 43 Comp Cas 431 (SC).
A claim for arrears of rent is an actionable claim – State of Bihar v. Maharajadhiraja Sr Kameshwar Singh(1952) SCR 889.
Right to claim provident fund is actionable claim – Official Trustee v. L Chippendale AIR 1944 Cal 335 *Bhupati Mohan Das v. Phanindra Chandra Chakravarty AIT 1935 Cal 756.
In Sunrise Associates v. Government of NCT of Delhi (2006) 5 SCC 603 = 4 STT 105 = 145 STC 576 =3 VST 151 (SC 5 member Constitution Bench), it was held that actionable claim is transferable [In this case, it was held that lottery ticket is an actionable claim].
Recharge coupon vouchers are sold by distributors of mobile telephone companies. The recharge coupon is for accessing telephone services for pre-determined period of time. Thus, recharge coupon is acknowledgment of receipt of money in advance for providing telecom service in future is actionable claim and hence not subject to sales tax – Bharti Airtel v. ACST (2010) 4 GST 342 = 34 VST 202 (WBTT).
An actionable claim can be enforced only through Court of Law and cannot be bought and sold as goods, though it can be assigned.