"Providing Compliment cricket match ticket to a related or distinct party is liable for GST": AAAR

"Providing Compliment cricket match ticket to a related or distinct party is liable for GST": AAAR

The bench comprised of Mr. Aruna Narayan Gupta and Kamal Kishor Yadav.

The Punjab Appellate Authority of Advance Ruling (AAAR) held that the activity of providing free complimentary tickets does not fall within the ambit of the domain of supply, therefore GST shall not be applicable on the same. However, if such complimentary tickets are issued by the appellant to any related party or any distinct person, it shall fall within the ambit of Schedule I relating to the account of the ambit of supply, and hence liable for GST.

According to the AAAR, if the act of providing complimentary tickets falls within the ambit of supply then the appellant will have to pay GST for such activity.

In this case the appellant was M/s KPH Dream Cricket Private Limited who had entered into a Franchise Agreement with the Board of Control for Cricket in India (BCCI) for establishing and operating a cricket team in the Indian Premier League (IPL) under the title of Punjab Kings.

In the present case, the appellant sought clarity on the same wherein free complimentary cricket match tickets were provided to the local government as a gesture of goodwill and to promote business. The Appellant intended on clarifications in connection with the treatment of GST liability of supply of complimentary tickets on account of courtesy/public relationship/promotion of business.

The AAAR ruled that the activity of providing complimentary tickets without consideration is an act of forbearance by tolerating people who are receiving the services provided by the appellant without paying any money. The monetary value of the act of forbearance would be the amount of money charged by the people paying for the tickets for availing of the service.

The Authority opined that such activity falls within the purview of supply, and therefore the appellant would be eligible for an Input Tax Credit in respect of complimentary tickets.

In response, the appellant contended that the CGST Act introduces the concept of "supply" as a taxable event and does away with the erstwhile taxable events of sale, service, manufacture, etc. Even though the CGST Act does not specifically define "free supply," the pre-GST regime recognized and provided for the treatment of supply where there was no consideration during the transfer of goods or services.

The appellant further submitted that government officials/consultants do not fall within the definition of "related persons" and the supply of tickets is only made as a goodwill gesture. It was also submitted that there was no expressed or implied consideration promised by the government officials or consultants to the Appellant at the time of receipt of the tickets or in the future.

The AAAR held that the expression "exempt supply" means the supply of any goods or services which attracts a nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the IGST Act, and includes the non-taxable supply. So, the activity of providing complimentary tickets is an exempt supply. As a result, ITC will not be available per subsection (2) of Section 17.