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Division Bench of HC stays verdict on levy of GST on race clubs

Krishnaprasad Bengaluru | Updated on August 12, 2021

It has been contended in the appeals that the single bench ought to have considered the pre-GST regime

A Division Bench of the High Court of Karnataka on Thursday stayed the operation of a single-judge bench’s order, which had declared that race clubs are liable to pay GST only on the commission and not on the entire face value of the bet or amount paid into the totaliser.

A Division Bench comprising Justice Satish Chandra Sharma and Justice Sachin Shankar Magadum passed the interim order after hearing the appeals filed by the Central and State governments.

Both the governments had questioned the correctness of the single bench’s June 2, 2021 judgment, which had struck down the Rule 31A(3) of the Central GST Rules, 2017 and the corresponding Rule 31A of the Karnataka GST Rules, 2017 as being contrary to the GST Act.

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The single bench had allowed the petitions filed by the Bangalore Turfs Club Ltd and Mysore Race Club Ltd questioning levy of GST on the face value of the bet.

Last week, the Division Bench had ordered to keep in abeyance the application filed by the BTC seeking refund of the GST paid based on the judgment of the single bench.

When the appeals came up for hearing on Thursday, the Division Bench, after hearing arguments on behalf of the governments and the BTC, stayed the single bench’s judgement while stating that appeals require consideration. Further hearing has been adjourned till October 7.

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It has been contended in the appeals that the single bench ought to have considered the pre-GST regime, in which the race clubs were subject to a totalizator tax and betting tax (partly by way of service tax and the remaining by way of betting tax) on the full bet amount.

The governments have also claimed in their appeals that the single bench has not properly applied the ratio laid by the apex court in the case of Skill Lotto Solutions vs Union of India, 2020 on the provisions to levy GST on lottery, betting and gambling.

Published on August 12, 2021

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