Free IPL tickets will attract GST:AAR Rajasthan
In the GST AAR of KPH Dream Cricket Private Limited. Applicant has raised the query regarding the nature of the “Complimentary Tickets”. Whether they are considered as supply or not. The GST AAR of KPH Dream Cricket Private Limited is as follows:
Facts of the case:
- That, M/s KPH Dream Cricket Private Limited (for shod “applicant” or “KPH”). having its registered office at Plot No 372 Industrial Area Phase-9, Mohali, SAS Nagar, Punjab-160062 is a franchisee of Board of Control for Cricket in India (for short “BCCl”) for the purpose of establishing and operating a cricket team to participate in Indian Premier League T20 cricket tournament (for short IPL”), under the title of “Kings XI Punjab”.
- That IPL is a domestic professional Twenty-20 cricket tournament in India, organized by BCCI-IPL every year under the gaming rules as prescribed by the BCCI-IPL and International Cricket Council (ICC).
- The Applicant has participated in a bid invited by the BCCI and after being successful in the said bid, entered into a Franchise Agreement, the Appellant has been permitted to establish and operate the team ‘Kings XI Punjab’.
- Furthermore, the Applicant to participate in IPL with other franchisees wherein few matches are held at each franchisee’s home ground During the financial year 2018-19, the Appellant will participate in IPL Including the matches held at their home grounds in Mohali (Punjab) and Indore (Madhya Pradesh).
- The applicant proposes to provide “Complimentary tickets” on account of courtesy/public relationship/promotion of business where no flow of consideration from the recipient/holder.
- M/s K.P.H Dream Cricket Private Limited, Plot No. 372, Industrial Area, Phase-9, Mohali, SAS Nagar, Punjab-160062 hereinafter referred to as ‘applicant’ had submitted an application for advance ruling in form GST ARA-01 vide his letter dated 02.04.2018 received on 04.04.2018 seeking to know
- Whether free tickets given as “Complimentary Tickets” falls within the definition of supply under CGST Act, 2017 and thus, whether the applicant is required to pay GST on such free tickets?
- Whether the applicant is eligible to claim Input Tax Credit (for short “ITC”) in respect of complimentary tickets?
- Under GST, the incidence of tax is ‘.supply’ The term ‘supply’ has been defined in an inclusive manner under Section 7 of the CGST Act.
- The term ‘supply’ is defined to include all forms of sale, transfers, exchanges, barters etc. made or agreed to be made for a consideration in the course or furtherance of business. However, supplies between related persons or distinct persons (different offices of the same entity) in the course or furtherance of business even if not for a consideration are supplies (in terms of Schedule I to the CGST Act).
- The AAR also ruled that K P H Dream Cricket would be eligible to claim input tax credit (ITC) on taxes paid for such complementary tickets only to the extent of input and input service for such tickets.
- The AAR said when the applicant issues a ‘complimentary ticket’ to any person, the applicant is “certainly displaying an act of forbearance by tolerating persons who are receiving the services provided by the applicant without paying any money, which other persons not receiving such complimentary tickets would have to pay for”.
- Stating that the complementary tickets given by K P H Dream Cricket to various persons would certainly be covered by the term ‘token’ and ‘voucher’, the AAR said as per GST laws the monetary value of “forbearance would naturally be pegged to the amount of money charged from other persons not receiving the ‘complementary tickets’ for availing the same services.”
- “The applicant has clearly missed the import of clause (b) in the definition of ‘Consideration’ given in section 2(31) of the CGST Act, 2017 which certainly covers the activity of the applicant of giving ‘complementary tickets’ to certain persons in the furtherance of his business and would thus be covered under scope of supply defined in Section 7(1)(a) of the CGST Act, 2017,” the AAR said.