Prize money from horse races taxable as supply under GST law

The receipt of prize money from horse race conducting entities, in the event the horse owned by the applicant wins the race, amounts to 'supply' under Section 7 of the Central Goods and Services Tax Act, 2017. The transaction is considered a taxable supply of services and is liable to GST at the rate of 18% (9% CGST and 9% SGST).

---

---

Issues Involved:
1. Whether receipt of prize money from horse race conducting entities, in the event horse owned by the applicant wins the race, amounts to 'supply' under Section 7 of the Central Goods and Services Tax Act, 2017.
2. Whether the transaction is liable to GST.

Detailed Analysis:

Issue 1: Whether receipt of prize money amounts to 'supply' under Section 7 of the CGST Act, 2017

Facts and Contentions:
- The applicant owns horses that participate in races organized by various clubs. Upon winning, the applicant receives prize money.
- The applicant has been paying GST on the prize money received, under the belief that it qualifies as a supply of service.
- The applicant sought clarity on whether this transaction falls within the ambit of 'supply' as defined under Section 7 of the CGST Act, 2017.

Applicant's Interpretation:
- The applicant argued that the prize money won at horse races is a taxable supply, as it involves providing a service (participation of horses in races) for a consideration (prize money).
- The applicant's horses participate in races organized by clubs, and if they win, prize money is awarded. This participation enriches the event, making it more valuable and interesting, benefiting both the race organizer and the horse owner.

Observations and Findings:
- The authority examined whether the activity undertaken by the applicant is covered under the scope of 'supply' under Section 7 of the CGST Act, 2017.
- Section 7 defines 'supply' to include all forms of supply of goods or services made for a consideration in the course or furtherance of business.
- The applicant's activity of providing specialized and trained horses for races qualifies as a supply of services. The prize money received is considered as consideration for this service.
- The activity is in the course or furtherance of business, as defined under Section 2(17) of the CGST Act, which includes any trade, commerce, or similar activity.

Conclusion:
- The receipt of prize money from horse race conducting entities, in the event the horse owned by the applicant wins the race, amounts to 'supply' under Section 7 of the CGST Act, 2017.

Issue 2: Whether the transaction is liable to GST

Provisions and Analysis:
- Section 9 of the CGST Act provides for the levy of GST on all intra-state supplies of goods or services.
- The Exemption Notification No. 12/2017 CT (Rate) exempts specific services from GST. The applicant's services are not covered under this exemption.
- The taxable supply of services is classified under Notification No. 11/2017-CT (Rate). The applicant's activity falls under the entry at Sr. no. 35, "Other services and other miscellaneous services including services nowhere else classified," and is taxable at 18% (9% CGST and 9% SGST).

Conclusion:
- The transaction is a taxable supply of services and is liable to GST at the rate of 18%.

Order:
Question:
- Whether receipt of prize money from horse race conducting entities, in the event horse owned by the applicant wins the race, would amount to 'supply' under Section 7 of the CGST Act, 2017, and consequently, liable to GSTRs.

Answer:
- The receipt of prize money is considered a supply under Section 7 of the CGST Act, 2017, and is liable to GST at 18% (9% CGST and 9% SGST).

---