The High Court of Karnataka on Thursday stayed the order of single judge quashing the Goods and Service Tax (GST) Rules of paying tax on the entire face value of betting amount at Bangalore Turf Club (BTC) and Mysore Race Club Limited (MRCL).
A bench headed by Justice Satish Chandra Sharma passed this order on the writ appeals filed by the Union government and the state government.
In its June 2, 2021, order, the single-judge bench had said that the consideration clubs receive is by way of commission for planting a totalizator, which is no different from that of a stockbroker or a travel agent.
In such transactions liability is on payment of GST only on the income commission that they earn and not on all the money that pass through them. The single bench had quashed Rule 31A (3) of the Central Goods and Services Tax Rules, 2017 and Rule 31A of the Karnataka Goods and Services Tax Rules, 2017, in respect to the two clubs.
In the appeal it is contended that that Section 15 of the GST Act, devolves power on the government to make rules for valuation and said that Rule 31A (3), which was quashed by the single bench, has been issued in pursuance of this power under Section 15. This rule has been upheld by the three-judge bench of the Supreme Court in 2020, the appeal stated.
The next hearing on the batch of appeals is posted to October 7, 2021.
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