1. The Story Behind the Stage
Every tax law truly comes to life not just through written rules but in the real-world details of commerce. Aayra Kapoor Ltd., a well-known event management company, eagerly planned an exciting musical extravaganza set for 31st December, 2025-an event filled with glamour, lively rhythms, and performances by renowned artists. To handle ticket sales, promotions, and audience engagement, they partnered with Harpreet Entertainment Ltd., a trusted Delhi-based firm with expertise in entertainment logistics. The financial arrangements between them seemed straightforward. Tickets were priced at Rs 570 each, the total amount attendees paid for entry. From this, Harpreet Entertainment Ltd. earned a commission of Rs 59.32 plus 18% GST, totalling Rs 10.68, for a total commission of Rs 70. The rest, Rs 500 per ticket, was the net income for Aayra Kapoor Ltd.
At first glance, it looked like a straightforward commercial setup. However, when the tickets went out, the way they handled invoicing added some complexity. Harpreet Entertainment Ltd., while helping manage sales, issued a single invoice that listed both Aayra Kapoor Ltd. and itself as suppliers. The invoice showed the ticket price as Rs 500-making it seem like it met the exemption limit under GST law, so no GST was charged on this amount. But at the same time, GST @18% was applied to its own commission of Rs 59.32. The intention was clear: to argue that the main part of the ticket sale was exempt under Notification No. 12/2017-Central Tax (Rate), with GST only being charged on the intermediary's commission. While this setup might have seemed simple on paper, its real substance was different, because the total amount paid by the customer was Rs 570. In the eyes of the law, that total reveals the full picture.
2. The Framework of Law and the Fabric of Definitions
To understand why this arrangement could not withstand legal scrutiny, one must step back to examine the architecture of the CGST Act, 2017. The Act is built upon precision-each definition fitting into a tightly knit system. Section 2(105) defines a "supplier" as the person supplying goods or services, including an agent acting as such on behalf of another. Section 2(93) defines a "recipient" as the person who is liable to pay consideration for a supply. These definitions make it clear that in every taxable event, there is a single supplier and a single recipient. Harpreet Entertainment Ltd. provides marketing and facilitation services to Aayra Kapoor Ltd.; therefore, Aayra Kapoor Ltd. is its recipient. Aayra Kapoor Ltd., in turn, supplies the right to admission to the customer, who becomes its recipient. There are, accordingly, two distinct supplies-two separate chains of consideration-and therefore, there must be two different invoices.
When this fundamental distinction blurs, it can lead to compliance issues. A tax invoice isn't just a simple piece of paper-it's actually the legal connection between two taxable persons. According to Section 31 of the CGST Act, 2017, every registered person is required to issue a tax invoice. Rule 46 of the CGST Rules, 2017 explains what details must be included: the name, address, and GSTIN of the supplier, the name and GSTIN of the recipient, plus a description, value, and the amount of tax charged. The rule is quite clear-each invoice should identify only one supplier. The law doesn't support creating a joint invoice with multiple suppliers. If an invoice lists two names, it no longer qualifies as a "tax invoice" and is no longer legally valid.
3. The True Value of a Ticket
If the supplier's identity sets up the structure of a supply, then the value defines what it actually is. Section 15 of the CGST Act, 2017 says that "the value of a supply shall be the transaction value, that is, the price actually paid or payable for the said supply." The words "actually paid or payable" cut through accounting labels and artificial distinctions; they focus on what the recipient truly pays. In this scenario, each concertgoer paid Rs 570 to attend the event. No matter how the intermediary and organizer divide that amount internally, the consideration for the right to admission stayed at Rs 570. To the customer, the experience they purchased-the entry to the event-was one single, indivisible service. So, the transaction value for GST purposes is Rs 570 per person.
This way of valuing has clear implications for the exemption under Notification No. 12/2017-Central Tax (Rate). Entry 81(b) of this notification exempts "services by way of right to admission to concerts, pageants, musical performances or sporting events other than a recognised sporting event, where the consideration for admission is not more than Rs 500 per person." The exemption is based purely on the amount, not on the nature of the service. Once the consideration goes over Rs 500, the exemption disappears altogether. There's no partial relief, no tolerance margin, and no rounding off. A Rs 500 ticket is exempt; a Rs 501 ticket is fully taxable. Since the consideration here is Rs 570, Aayra Kapoor Ltd. can't use the exemption, and the entire ticket price is taxable.
4. The Legal Infirmity of the Combined Invoice
When Harpreet Entertainment Ltd. issued a combined invoice showing both its own and Aayra Kapoor Ltd.'s names as suppliers, it made a mistake that touches the very foundation of the GST system. The tax invoice is a vital legal document that facilitates credit flow, determines who is liable, and holds parties accountable. By combining two suppliers into one invoice, the intermediary unintentionally disrupted the clear tax trail, making it difficult to trace which outward supply corresponds to which inward supply. Since the system relies heavily on digital data for reconciliation between suppliers and recipients, such an invoice simply cannot serve its purpose. Additionally, by listing the ticket value as Rs 500 and leaving it out of tax, the invoice underestimated the actual transaction amount and gave a misleading picture of the supply's nature. Legally, this document does not qualify as a valid tax invoice, nor does it support any exemption claim.
There's a fundamental issue beyond just procedural mistakes. GST is designed to be a destination-based, credit-focused tax, relying on a continuous chain of invoices linking every supply. When a single invoice shows two suppliers, it breaks this chain, causing the entire system of input tax credits and verification to collapse. This rule isn't just a technical formality; it's crucial for maintaining the system's integrity. Therefore, the invoice in question fails not only on a technical level but also in its core purpose-disrupting both the rules and the transparency GST aims to uphold.
5. Determination of the Correct Tax Liability
Once you understand the total transaction value and the supply details, the tax situation becomes clear. The customer pays a total of Rs 570, out of which Rs 59.32 is the intermediary's commission, and Rs 10.68 is the GST on that commission. The supply made by the intermediary to Aayra Kapoor Ltd. is fully taxable at 18%. Additionally, the admission right provided by Aayra Kapoor Ltd. to the public is also taxable, because the price per person exceeds Rs 500. To stay compliant, two separate invoices are needed: one from Harpreet Entertainment Ltd. to Aayra Kapoor Ltd. for Rs 59.32 plus Rs 10.68 GST, and another from Aayra Kapoor Ltd. to the final customer for Rs 570 (including GST). Aayra Kapoor Ltd. can then claim an input tax credit of Rs 10.68 on the intermediary's invoice. This approach ensures the transaction is fully compliant.
The attempt to merge both supplies into a single invoice and to depict the ticket price as Rs 500 not only undermines legality but also undermines commercial clarity. Such practices may appear convenient for marketing but expose both entities to tax demand, interest, and penalty. It is worth remembering that under Section 122(1)(i) of the CGST Act, 2017issuing an incorrect or false invoice constitutes an offence liable to penalty. Correct documentation, therefore, is not just a matter of good practice; it is a matter of statutory obligation.
6. The Rigid Nature of the Rs 500 Threshold
The Rs 500 exemption limit set under Entry 81(b) is intentionally straightforward and clear. The drafters of the notification intended to provide relief to small-ticket entertainment events, not to larger commercial performances. Hence, the threshold is fixed in numerical terms- "not more than Rs 500 per person." The moment the consideration crosses that boundary, even marginally, the exemption ceases in toto. The logic is straightforward: a single threshold rule avoids disputes, ensures uniformity, and prevents manipulation of ticket values. Therefore, in the present case, the exemption is unavailable, and the entire ticket value of Rs 570 is liable to GST. Aayra Kapoor Ltd. must accordingly discharge tax on the full value, though it can avail of input credit on the intermediary's commission.
7. Broader Professional Reflections
For professionals and practitioners, this case offers important lessons that go well beyond entertainment events. It highlights the importance of each supply having its own clear identity, value, and documentation. When supplies are combined or misrepresented, compliance can easily falter. It's a reminder that invoices are more than just accounting tools-they are legal documents, and their accuracy affects both the validity of the transaction and the credit available. The case also emphasizes that valuation under Section 15 is based on the actual consideration, not on splitting amounts for convenience. Most importantly, it underscores that transparency is at the heart of GST-the law appreciates accuracy and takes issue with concealment, no matter how small.
This case highlights how vital professional ethics are in tax compliance. While it might seem small, artificially lowering ticket prices to claim exemptions while actually collecting more can weaken the fairness that GST stands for. The law aims for accuracy, not over- or under-collection. Therefore, professionals helping clients navigate this should find a balanced approach between business goals and legal honesty. Remember, it's integrity-more than clever tricks-that ensures lasting compliance.
8. The Concluding Insight-Law, Logic, and Harmony
Looking at the whole picture, the situation is quite clear. Harpreet Entertainment Ltd. acts as an intermediary for Aayra Kapoor Ltd., not directly for the ticket buyers. An invoice listing both as suppliers isn't valid under Rule 46 of the CGST Rules, 2017. The actual amount collected for entry is Rs 570 per person, which goes beyond the exemption limit specified under S. No. 81(b) of Notification No. 12/2017-CT (Rate). Because of this, the exemption can't be claimed, and Aayra Kapoor Ltd. needs to pay GST on the full ticket price. However, they can rightfully claim an input tax credit of Rs 10.68 for the intermediary's commission. The best way forward is to keep detailed records, ensure proper valuation, and follow transparent accounting practices-this not only keeps everything compliant but also helps preserve credits and avoids unnecessary disputes. While this case is focused on tax law, it also highlights an important truth about good governance and professionalism. Just as music requires harmony among different instruments, taxation requires harmony among intentions, actions, and records. The Rs 500 threshold might seem small, but it embodies the discipline that law expects from business. Every number on an invoice tells a story; every compliance step reflects integrity. Ultimately, harmony in music creates beauty, and harmony in documentation brings peace-peace that's truly valuable in taxation and well worth the effort.
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