Activity Of Providing Free Complimentary Cricket Match Tickets Is Exempted From GST: AAAR

The bench of Aruna Narayan Gupta and Kamal Kishor Yadav has observed that the appellant would not be eligible to avail input tax credit in relation to the activity of providing free complimentary cricket match tickets. However, if an activity or transaction is treated as a supply because it is provided by the appellant to a related or distinct person, the appellant is entitled to the input tax credit.

The appellant, KPH Dream Cricket Private Limited, intended to distribute match tickets to local government authorities, officials, consultants, etc., free of charge as a goodwill gesture for the promotion of business. These tickets were to be distributed without any consideration flowing from the receivers to the appellant.

The Appellant approached the Authority for Advance Ruling (AAR) 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.

The AAR ruled that the activity of providing complimentary tickets without any consideration would be considered a supply of services and the appellant would be eligible for an Input Tax Credit in respect of complimentary tickets.

The Authority held that when the appellant issues a complimentary ticket to any person, the appellant is displaying 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 the service.

The appellant changed the AAR's ruling. The appellant contended that the CGST Act has introduced the concept of "supply" as a taxable event and done 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 recognised and provided for the treatment of supply where there was no consideration during the transfer of goods or services.

The appellant submitted that as the 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 non-taxable supply. So, the activity of providing complimentary tickets is an exempt supply. As a result, ITC will not be available in accordance with subsection (2) of Section 17.

Appellant's Name: KPH Dream Cricket Private Limited

Citation: Advance Ruling No. 01/AAAR/CGST/KPH/2022

Dated: 01.06.2022

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