Horse race clubs liable to pay GST only on commission and not entire bet amount; Rule 31A(3) of CGST Rules ultra vires

Last updated: 05 June 2021

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Quick Summary

The Karnataka High Court has ruled that horse race clubs are only liable to pay Goods and Services Tax (GST) on the commission they earn, not on the entire amount bet through their totalisators. The court found that Rule 31A(3) of the CGST Rules, which sought to levy GST on the full bet amount, was beyond the scope of the CGST Act and therefore invalid. This decision aligns with the principle that tax should only be levied on the actual consideration received by the service provider.

Court :
Karnataka High Court

Brief :
The Hon’ble Karnataka High Court ("HC") in Bangalore Turf Club Limited and ors. v. Union of India [WP No. 11168/2018 and WP No. 11167/2018 decided on June 02, 2021] held that Goods and Service Tax ("GST") cannot be levied on the entire bet amount received in the totalisator as it would take away the principle that tax can only be levied on consideration received under the Central Goods and Service Tax Act, 2017 ("CGST Act"). The Court also declared Rule 31A(3) of the Central Goods and Service Tax Rules, 2017 ("CGST Rules") and Karnataka Goods and Services Tax Rules, 2017 ("KGST rules") as ultra virus of the CGST Act.

Citation :
WP No. 11168/2018 and WP No. 11167/2018 decided on June 02, 2021

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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