Prize cash acquired from horse-race golf equipment not liable to GST: AAAR

2020/09 28 17:09

Maharashtra’s Appellate Authority for Advance Ruling (AAAR) has held that receipt of prize cash/stakes from horse-race golf equipment — within the occasion horse wins the race — wouldn’t be topic to Items & Providers Tax (GST).

“We put aside the advance ruling issued by AAR and maintain that prize cash/stakes won’t be topic to GST within the absence of any provide,” AAAR mentioned in its order whereas including that applicant isn’t entitled to avail any Enter Tax Credit score (ITC). Earlier, AAR had dominated that the quantity of prize cash acquired from the occasions conducting entities could be coated underneath provide class of GST regulation and liable to be taxed at 18 per cent.

Separate transactions

The AAAR noticed there are two separate transactions right here – participation in races organised by horse racing golf equipment in opposition to entry price payable by the horse race proprietor which is provide of service by race conducting entity to such aspiring horse race homeowners and supplying of horses for the occasion. The Bench mentioned there isn’t any ingredient of service when the horse wins the race and will get the prize.

As regards, the rivalry it’s a conditional contract, the Bench mentioned that not each contract turns into taxable underneath the CGST regulation. Each provide is a contract, however not each contract is a provide, it added.

The Tax Division had approached AAAR interesting in opposition to the order of AAR because it felt that sure information associated with investigation in opposition to Vijay Baburao Shirke, the horse proprietor was not disclosed earlier than AAR.

The AAAR noticed that no service has been offered by the applicant to the racing golf equipment for the prize cash/stakes acquired from such golf equipment given that solely these horse homeowners successful the race will get the prize cash. Thus, there isn’t any direct nexus between the actions carries out by the horse homeowners viz. by offering thoroughbred horses to race golf equipment for organizing horse race occasions, and the prize cash acquired by such horse homeowners.

The Authority discovered that clause of direct and fast hyperlink between the availability and consideration is totally absent in current scenario. Accordingly, it clarified that participation and successful are two separate occasions or transaction.

Since there isn’t any taxable provide, assessee won’t be eligible to avail ITC in respect of any enter provide together with the entry price, the coaching costs paid to the horse trainers and the costs paid to the jockeys and so forth, it mentioned.

In keeping with Harpreet Singh, Companion at KPMG, participation and successful are two separate transactions and direct and fast hyperlink between provide and consideration is important are attention-grabbing observations on this ruling. “This ruling might present some steering to the web gaming business which is gaining prominence as of late, and struggling to decipher comparable points on taxability underneath GST,” he mentioned.

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