No GST on providing free complimentary cricket match tickets
Facts and Issues of the case
M/s KPH Dream Cricket Private Limited has entered into a Franchise Agreement in the month of April, 2008 with the Board of Control for Cricket in India (‘BCCI) for the purpose of establishing and operating a cricket team in the Indian Premier League (‘IPL’) under the title of ’Punjab Kings’. Appellant participates in the IPL with other franchisees where the matches are held at the home and away venues as designated by the BCCI-IPL.
The Appellant intends to distribute match tickets to local Governmental authorities/officials, consultants, etc. free of cost as a goodwill gesture for promotion of business. These tickets are to be disinhibited without any consideration flowing from the receivers to the Appellant.
Consequently, the Appellant approached the Ld. Authority for Advance Ruling, ((hereinafter referred to as, “AAR”) Punjab with the intention of seeking clarity on the treatment and possible GST liability on the supply of complimentary tickets on account of courtesy/ public relationship/ promotion of business, with the above mentioned questions.
Observations by the Court
The Court has carefully gone through the facts of the case, the grounds of appeal delineated by the appellant, order of Authority for Advance Ruling and the relevant legal provisions of the Act.
The primary question to be decided is whether the activity of providing “complimentary tickets” by the appellant falls within the definition of supply under the Punjab GST Act,2017 /CGST Act,20l7 and whether the appellant would be required to pay tax on such complimentary tickets. As per the appellant, complimentary tickets are provided without any consideration as a goodwill gesture for promotion of business. These tickets are to be distributed without any consideration flowing from the receivers to the Appellant. In the absence of any consideration it cannot be treated as supply under section 7 of the Act.
The definition of supply under section 7 of the Act is an inclusive one and the broad contours of the supply have been defined to include all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. The two key elements that are required to be present for any activity or transaction to fall within the ambit of supply are *consideration” as well as “furtherance of business”.
Thus, the argument by the appellant that on account of absence of consideration in such activity or transaction, the same should not fall within the territory of supply is well taken and therefore the activity of providing such free or complimentary tickets is not a supply as per the GST Act. However, it is important to note here that as per section 7 of the Act read with Schedule I any activity or transaction between the related people including employee shall be treated as supply even if the aspect of consideration is not there. So, where such complimentary tickets are being provided by the appellant to related person as defined in section 15 of the Act or to distinct person as defined in section 25 of the Act the same would fall within the ambit of supply even if there is no consideration.
Looking broadly at the scheme of things under the GST Act it can be deduced that the ailment of ITC directly flows with the taxability of the outward supply. Where the output supply is either not taxable that is exempt or has been used or deployed for n business purpose the Act does not provide for ailment of ITC in relation to such supply. Since the appellant itself has argued that the activity does fall within the domain of supply it consequently follows that it shall be treated as a non-taxable supply under the Act. The expression “exempt supply” as defined under the Act means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section d of the Integrated Goods and Services Tax Act, and includes non-taxable supply. So, the activity of providing complimentary tickets is an exempt supply, and therefore there shall be no ailment of ITC in relation to same in accordance with sub- section (2) of section 17 of the Act.
Activity of providing free complimentary tickets does not fall within the domain of supply as it does not have the element of consideration. However, where such complimentary tickets are being provided by the appellant to a related person or a distinct person the same shall fall within the ambit of supply on account of Schedule I of the Act and the appellant would be liable to pay tax on the same; The appellant would not be eligible to avail input tax credit in relation to such activity.In-re-KPH-Dream-Cricket-Private-Limited-GST-AAAR-Punjab-1