Explanation of Notification No. 01/2020 Dt. 21.02.2020 of Central Tax (Rate).
Such Notification is Deal with GST Rate on Supply of Lottery.
A) What is Lottery Tickets:-
‘Lottery tickets’, is actionable claim and is classified as ‘Goods’, under GST.
However as per Schedule III Actionable Claim is neither supply of Goods nor Supply of Service, but Lottery Tickets is exception.
Hence, the sale of lottery tickets would be considered to be the supply of taxable goods and will attract GST on Lottery sales.
B) What is Actionable Claim:-
As per Section 3 of the Transfer of Property Act, 1882.
Actionable Claim is a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in possession either actual or constructive, of the claimant, which the civil courts recognize as affording grounds of relief whether such debt or beneficial interest be existent, accruing or conditional or contingent.
C) Before such Notification GST rate on Supply of Lottery as Under.
1) If Lottery Run by State Government:- GST Rate is 12%.
2) If Lottery authorized by State Governments:- 28%.
Now Understand the Meaning of Lottery Run by State Government & Lottery authorized by State Governments.
1) ‘Lottery run by State Governments’ means a lottery not allowed to be sold in any state other than the organizing state.
2) ‘Lottery authorized by State Governments’ means a lottery which is authorized to be sold in State(s) other than the organizing state also.
D) After such Notification there is no difference between whether ‘Lottery run by State Governments’ and ‘Lottery authorized by State Governments’.
Uniform rate is notified by Government i.e. 28%.
E) Valuation of Supply of Lottery:-
Value of supply of lottery under sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017 shall be deemed to be 100/128 of the face value of ticket or of the price as notified in the Official Gazette by the organizing State, whichever is higher.
F) Invoicing of Sale of Lottery:-
Supply of Lottery Tickets is covered under the Tax Invoice as per Sec 31 of CGST Act, 2017 and contained all the requirement as mentioned under Rule 46. There is no relaxation in invoicing requirements for a supplier of lottery tickets.
G) Time of Supply of Lottery Tickets:-
1) Date of issue of invoice or last date when the supplier is required to issue an invoice.
2) Date on which supplier receives the payment for supply.
Whichever is Earlier.
When a person pays the amount to participate in a lottery or to buy the lottery ticket, the amount of money paid to participate is treated as payment for supply.
H) Place of Supply of Lottery Tickets:-
1) “Lottery run by State Government” is always an intra-state supply. The place of supply will always be the State which runs the lottery game. This is because such a lottery scheme is always conducted within the State.
2) “Lottery authorised by the State Government” but conducted by agencies can be an interstate or intrastate supply.
The place of supply will have to be determined as under:
i) When supply involves the movement of goods:
The place of supply shall be the location of goods at the time at which movement of goods terminates for delivery to the recipient.
ii) When supply does not involve the movement of goods:
The place of supply shall be the location of goods at the time of delivery to the recipient.
I) Payment of Tax:-
1) “Lottery run by State Government”
i) Tickets sold by State Government
ii) Lottery distributor must pay tax on reverse charge (Sec 9(3)) at the time of procurement of tickets from the Government.
iii) No tax required to be paid further when sold to sub-agent / customer, if a tax is paid by a distributor.
iv) Sub-agents not required to register under GST
2) “Lottery authorised by State Government”
i) Tax paid under the forward charge by the supplier of lottery tickets
ii) The tax must be paid at each point of supply under normal charge. When selling agent sells tickets to sub-agent, he must pay GST.
iii) Sub-agents must register under GST and pay tax.