Taxable Supply: Complimentary Tickets & Input Tax Credit under CGST Act

The case involved a ruling on whether issuing free tickets as "Complimentary Tickets" constitutes a taxable supply under the CGST Act, 2017 and if Input Tax Credit (ITC) can be claimed on inputs used for providing such tickets. The Authority for Advance Ruling (AAR) determined that providing complimentary tickets is considered a supply of service subject to GST. The AAR also confirmed that the applicant is eligible for ITC on inputs and input services used in offering complimentary tickets, in accordance with Section 16 of the CGST Act, 2017.

---

---

Issues Involved:
1. Whether free tickets given as “Complimentary Tickets” fall within the definition of supply under the CGST Act, 2017.
2. Whether the applicant is eligible to claim Input Tax Credit (ITC) in respect of complimentary tickets.

Issue-wise Detailed Analysis:

1. Definition of Supply for Complimentary Tickets:

The applicant, M/s. K.P.H. Dream Cricket Private Limited, sought an advance ruling on whether free tickets given as "Complimentary Tickets" fall within the definition of supply under the CGST Act, 2017, and whether GST is applicable on such free tickets.

The core argument presented by the applicant was that complimentary tickets are provided without any consideration and hence should not fall under the definition of supply as per Section 7 of the CGST Act, 2017. They referenced the inclusive definition of 'supply' under Section 7, which encompasses all forms of sale, transfer, barter, exchange, etc., made for a consideration in the course or furtherance of business. The applicant argued that since complimentary tickets are given without consideration, they should not be taxable.

However, the Authority for Advance Ruling (AAR) examined the definition of 'consideration' under Section 2(31) of the CGST Act, which includes any payment made or to be made, whether in money or otherwise, and the monetary value of any act or forbearance in respect of the supply of goods or services. The AAR concluded that issuing complimentary tickets involves an act of forbearance, as the applicant tolerates the recipient enjoying the services without payment, which other customers pay for. This act of forbearance is considered a form of consideration.

Furthermore, the AAR referred to Rule 32(6) of the CGST Rules, 2017, which states that the value of a token, voucher, or coupon redeemable against a supply of goods or services shall be equal to the money value of the goods or services redeemable against such token or voucher. Complimentary tickets fall under this category, thus having a monetary value equivalent to the paid tickets.

Additionally, the AAR highlighted Section 7(1)(d) of the CGST Act, which includes activities specified in Schedule II, such as agreeing to the obligation to tolerate an act or situation as a supply of services, regardless of consideration. Therefore, the issuance of complimentary tickets is considered a supply of service under both Section 7(1)(a) and Section 7(1)(d) of the CGST Act, 2017, and is subject to GST.

2. Eligibility for Input Tax Credit (ITC):

The second issue addressed was whether the applicant is eligible to claim ITC on inputs used for providing complimentary tickets. The AAR examined the provisions of Section 16 of the CGST Act, 2017, which allows registered taxable persons to take credit of input tax charged on any supply of goods or services used in the course or furtherance of business.

Since the activity of providing complimentary tickets is considered a taxable supply, the applicant is eligible to claim ITC on inputs and input services used in providing these tickets. The AAR clarified that the ITC is available for inputs and input services going into the provision of complimentary tickets but not on the tax levied on the supply of the complimentary tickets themselves.

Conclusion:

The AAR ruled that the activity of providing complimentary tickets free of charge is considered a supply of service under the CGST Act, 2017, and is subject to GST. Consequently, the applicant is eligible for ITC on inputs and input services used in the provision of these complimentary tickets, as per Section 16 of the CGST Act, 2017.

---