Facts of the case:
- The Applicant, Shri Vijay B. Shirke is duly registered under the GST. He owns horses and the horses owned by the applicant participate in the races organized at different clubs.
- The horse races take place at Royal Western India Turf Club (RWITC) located in Mumbai and Pune. The applicant also participates in horse races held in Mysore Club, Bangalore Turf Club, Hyderabad Race Club, Royal Calcutta Turf Club and Madras Race Club.
- Winning such horse races is awarded prize money in respect of horses, which win the races to the applicant.
Issue involved: 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 Central Goods and Service Tax Act, 2017 or not and consequently, liable to GST or not?
Provisions and Interpretation of the law:
- As per Chapter III of the CGST Act 2017, it provides for levy and collection of tax (section 9 is the charging section). This charging section provides for levy of taxes on all intra-state supplies of services at such rates, as notified by the Government and collected in such manner as may be prescribed in the notification schedules.
- As per section 2(102), 2.4 Section 2(102) of CGST Act, 2017 defines “Service” as: “anything other than goods, money and securities but includes activities relaying to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged”
- Further, the Exemption Notification No. 12/2017 CT (Rate) dt. 28.6.2017 is issued by the government, by which a specific supply of services is exempted from taxes. The services other than those notified services would naturally be covered under “Taxable supply of services”. The taxable supply of services are notified and classified under Notification No. 17 CT (Rate) dt.28.6.2017 and rate of taxes are prescribed therein. It is noticed that the applicant’s services are not covered under exemption notification No.12/2017 of CGST ACT and therefore, this transaction is not covered under the exemption category of services.
- Hence, the Notification No.11/2017 was pursued, which covers the taxable supply of services and rate of tax thereon. We find that the applicant’s activity and services rendered are not specifically described in the said notification 11/2017.
- It is covered by the entry at Sr. no. 35 i.e. “Other services and other miscellaneous services including services nowhere else classified” and are held taxable services @ 18 % (9% each of CGST and SGST).
Conclusion: The Maharashtra Authority of Advance Ruling ( AAR ) has ruled that The amount of prize money received from the horse race conducting entities, in the event horse owned by the applicant wins the race would be covered under ‘supply under section 7 of the CGST Act, 2017 and consequently, it is held as taxable supply of services and liable to GST @ (9% each of CGST and SGST).