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Big relief for Horse Race Clubs as GST only on Commission: Karnataka HC

Horse racing clubs can pay GST on commissions instead of the full betting amount the Karnataka high court ruled on Friday giving release to this organization that have long argued against the levy on the full amount the petitioner are liability for payment of GST on the commission that they receive for the service that they render through the totalisator and not on the total amount collected in the totalizator the petitioner in the case were the Bangalore turf club & Mysore Race club according to the order the betting amount placed with the totalizator cannot be constructed as a business, consideration, Goods or supply as defined under GST act, since the amount held by the race club is only for a brief period and it’s fiduciary capacity.

Making the entire bet amount liable for payment of GST would take away the core principle under the central GST act that tax can only be on the basis of consideration justice said this can be nothing different from that of a stockbroker or a travel agent both of whom are liable to pay GST only on the income commission that they earn on and not on all the monies that passes through them he noted the order also quashed a rule and subsequent circular issued by the government in January 2018 which said GST would have to be paid entire value of the bet placed on the ground that the rule was beyond the scope of act.

The order the clubs pay GST at 28% the order provides clarity that takes under indirect regime should be paid only on consideration earned by such gaming companies and totalizators instead of the gross revenue collected experts said the industry will significantly benefit as the valuation of the services derived exclude the portion of the amount paid which is not towards the service and various such transactions have been a subject matter of debate, discussion and scrutiny the GST counsel has formed a group of minister to examine the issue of Casinos race course and online gaming hotels and see whether any change is required in the GST provisions judicial interpretation of the provisions per se is enough for the G0M to set the course right and clarify the valuation mechanism for the entire industry ensuring tax stability. S-ET

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