Winnings from betting, gambling and horse racing: Karnataka High Court stays Single Judge order that struck down Rule 31A(3) of CGST Rules

The Karnataka High Court on Thursday stayed an order of a Single Judge which had struck down Rule 31A(3) of the Central Goods and Services Tax Rules, 2017 (CGST Rules). .A Division Bench of Justices Satish Chandra Sharma and Sachin Shankar Magadum passed this order in a batch of writ appeals filed by the Union and State governments..Rule 31A(3) of the CGST Rules, which deals with value of supply in betting, gambling or horse racing, reads as under:(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..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.It was contended that the judgement passed by the Single Judge was erroneous and liable to be set aside, and is opposed to the scheme and provisions of the GST law.Further, it was argued that that Section 15 of the GST Act confers power upon the government to make rules for valuation. Rule 31A (3), which was quashed by the Single Judge, has been issued in pursuance of this power under Section 15. This Rule has been upheld by a three-judge bench of the Supreme Court in 2020, the appeal said. .When the appeals came up for hearing on Thursday, the Division Bench, after hearing arguments, stayed the Single Judge verdict and stated that the appeals require consideration. The matter will be next heard on October 7..In June, the High Court had struck down Rule 31A(3) of the Central Goods and Services Tax (CGST) Rules, 2017..Justice M Nagaprasanna of the High Court had 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..Karnataka High Court strikes down Rule 31A(3) of CGST Rules on plea by Bangalore Turf Club