A Division Bench of the Karnataka High Court on Thursday stayed the operation of a single judge 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 computer that registers bets and divides the total amount among punters).
A Division Bench, comprising Justice Satish Chandra Sharma and Justice Sachin Shankar Magadum, passed the interim order after hearing appeals filed by the Union and State governments.
Both the governments had questioned the correctness of the June 2, 2021, judgment, which had struck down 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.
The single judge Bench had allowed the petitions filed by the Bangalore Turfs Club (BTC) Ltd. and Mysore Race Club Ltd. questioning the 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 stayed the single Bench’s judgment while stating that appeals require consideration. The hearing has been adjourned till October 7.
It has been contended in the appeals that the single Bench ought to have considered the pre-GST regime, in which race clubs were subject to a totalisator 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 also claimed that the single Bench had not properly applied the ratio laid by the top court in the case of Skill Lotto Solutions vs Union of India, 2020 on the provisions to levy GST on lottery and betting.
