Karnataka High Court strikes down Rule 31A(3) of CGST Rules on plea by Bangalore Turf Club

The Karnataka High Court on Wednesday struck down Rule 31A(3) of the Central Goods and Services Tax (CGST) Rules, 2017. .Justice M Nagaprasanna of the High Court pronounced the judgment on a petition moved by Bangalore Turf Club (BTC) challenging the Rule 31A(3) of the CGST Rules, 2017 and the corresponding State Rule..The provision in question reads as under: Rule 31A. Value of supply in case of lottery, betting, gambling and horse racing(3) The value of supply of actionable claim in the form of chance to win in betting, gambling or horse racing in a race club shall be 100% of the face value of the bet or the amount paid into the totalisator..The rule, in essence, imposed GST on the total turnover of the race club, instead of the actual commission earned by it..It was contended that before the GST regime, the petitioner was treated as a service provider under Chapter V, Finance Act, 1994 and service tax was levied on the petitioner's commission. However, after the GST Act come into force, tax i.e., GST was levied on the amount paid to the totalisator. "This is an amount which does not belong to the Race Club and is held in trust for the winning punter. The Petitioner's role is confined to providing a pooling service. The petitioner is taxed on an amount not accruing to it," the plea argued. .Senior Advocate K Vivek Reddy represented the Bangalore Turf Club while the State of Karnataka was represented by Advocate Vikram Huligol..Story to be updated. .Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.