Lawstreet Journal

Relief for Turf Clubs as Karnataka High Court Strikes Down Rule 31A(3) of CGST Rules

Lawstreet Journal 9 Jun 2021 12:30am

Image courtesy: Lawstreet Journal Judiciary Relief for Turf Clubs as Karnataka High Court Strikes Down Rule 31A(3) of CGST Rules

In a judgment that gives major tax relief to turf clubs, the Karnataka High Court has struck down Rule 31A(3) of the Central Goods and Services Tax Rules (CGST), 2017. 

Sub-clause (3) of Rule 31A of the CGST which was inserted by issuing a notification on January 23, 2018, has been struck down by Justice M. Nagaprasanna on Wednesday (June 2, 2021), for being ultra vires the provisions of the CGST Act. 

Sub-rule (3) declares that the value of supply of actionable claim in the form of chance to win in betting, gambling, or horse racing in a race club shall be 100% of the face value of the bet or the amount paid into the totalisator. 

The Petitioners are Banglore Turf Club Ltd. and Mysore Race Club Ltd who conduct horse racing and facilitate betting by punters. They had challenged the legislative intent of making the petitioners liable to pay GST on the entire bet.

Explaining the situation before the CGST Rules were introduced, the petitioner submitted that bets are placed by the punter either with a totalisator or a licensed bookmaker. If a horse backed by the punter wins, he receives the prize money of the losing punter. The prize money is distributed by the petitioners to the winning punter and out of that amount the petitioners take their commission. 

They further contended that Rule (3) makes GST liable on the entire amount received by the totalisator and since the supply of bets is not in the… Continue Reading...

Tagged: Karnataka high court  
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