Deploying Gaming Machines and Equipment in a Mall would not term as an ‘amusement park’ but fall under ‘amusement’ facilities and taxable at 28%

Categories: Advance Ruling
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Recently, the issue of applicable rate of GST on gaming zone services came before the Authority of Advance Ruling of Maharashtra, wherein it was held that these facilities constitute ‘amusement facility’ and are therefore taxable at 28%. 

Facts & Background:

  • M/s Bandai Namco India Pvt. Ltd. (“the applicant” or “BNIPL”) is an Indian arm of M/s. Bandai Namco Entertainment Inc (“BNEI”) which is a leading developer and publisher of a Japanese video game., BNEI also releases videos, music, and other entertainment products related to its intellectual properties (‘IP’).
  • BNIPL have stationed various gaming equipment and machines for different age groups, consisting of kids, teenagers and adults. The equipment and machines are either coin operated or card operated in its faculty.
  • The various gaming equipment are classified based on the nature of games involving physical as well as mental skills which are coin operated and card operated such as:
    • Kiddie Rides (i.e. Carousel)
    • Arcade Games (i.e. Car Drive Game)
    • Redemption Games (i.e. Ball Drop Game)
    • Play area with entry and exit inside our premises
  • At present, the applicant is discharging tax liability @28% as a supply of services as per Sr. No. 34 of the Notification no. 11/2017 Central Tax (Rate) dated June 28, 2017.
  • With the advent of Notification No. 01/2018Central Tax (Rate) dated January 25, 2018, the entry in respect of amusement parks/facilities have been spilt into 2 different entries, and the effective rate of tax has been reduced from 28% to 18% on certain services. Therefore, the applicant is seeking an advance ruling from this authority as to the applicability of GST rate of such services on the service activities of the company.

Issue Involved:

  • With the advent of GST Notification 01/2018, which reduced the GST rate on services by way of admission to amusement parks including theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet, the applicant seeks an Advance Ruling as to the applicable rate of GST on the services/ activities of the Company?

Applicant Interpretation of Law:

  • The applicant submits that the GST Notification No. 01/2018 reduced the rate of services by way of admission to the amusement park from 28% to 18% w.e.f. January 25, 2018. The applicant further contended that the expression “amusement park” is not defined in GST law or rules made thereunder. In this regard, the applicant contended that the meaning of words has to be understood in the common parlance.
  • The applicant is relying on the definition of amusement park under section 2(a-1) of erstwhile Bombay Entertainment Act extracted below:
    • “Amusement park” means a place wherein various type of amusement including gaming or rides or both (but excluding exhibition by cinematography and video exhibition) are provided fairly on a permanent basis, on payment of admission”
  • Further, it was evident from the above that, amusement park includes the games and rides provided in premises. The terms ‘game’ has been defined in the explanation of the Bombay Entertainment Act includes game operated mechanically as well as electronically. The said explanation is reproduced below:
    • “the expression ‘game’ includes video games which are played with the aid of a machine which is operated electronically or mechanically or electromechanically for the purpose of entertainment or otherwise”.
  • The applicant accordingly applies the same principle in the present case and seeks the authority to classify its services under the ambit of an amusement park.

Held:

  • The Hon’ble Authority of Maharashtra vide its Advance Ruling Order No. GST-ARA-109-2018-19/B-27 dated April 08, 2019, observed the meaning of ‘Amusement Park’  which includes a large area of land that is used for a specific purpose in a big open area containing various amusement facilities which themselves may be under covered premises.
  • The authority further observed that the applicant has stationed various gaming equipment and machine for different age groups consisting of kids, teenagers and adults. The equipment and machines are either coin operated or card operated. Thus, through the various equipment and machine stationed in the mall applicant allows an interested person such as kids, teenagers and adults facilities to enjoy various games.
  • It distinguished between the expressions ‘amusement park’ and ‘amusement facility-

Amusement Park

Amusement facility

  • The meaning of a ‘park’ in various dictionaries says that a park is a ‘large area of land’ used for a particular purpose.
  • Like wildlife parks for wild animals, industrial parks for setting up industries.
  • The dictionary meaning of a ‘facility’ is a place, building, equipment or an amenity for a particular purpose’.
  • The authority concluded that the applicant’s own admission to the effect that they are engaged in providing amusement facility services and running a family entertainment center in a leading mall. Further, the applicant is also advertising its activities in the public domain as providing amusement facilities. Therefore, the subject services or activities supplied by the applicant by deploying gaming machines and equipment would fall within the expression, as an ‘amusement park’ but fall under ‘amusement’ facilities and taxable at a GST rate of 28% w.e.f. January 25, 2018.

Citation: [M/s Bandai Namco India Private Limited (2019 (7) TMI 96)]