High Court of Karnataka has struck down GST rules levying tax on
entire 100% turnover.
In a landmark judgement that gives major tax relief to turf clubs,The high court of Karnataka has declared that the clubs are liable for the payment of GST only on the commission that they receive for the service that is rendered through the totalizator. The court clearly said that the CLUBS are not liable to pay GST on the entire 100% of the face value of the bet or the amount paid into the totalizator. While striking down the rule 31 A (3) OF THE CENTRAL GST RULES 2017. The judgement was delivered on June 2 while allowing the petition filed in 2018 by BTC and My.RC questioning the legality of these rules.
Now that the Karnataka high court has given that judgement against the central GST rule. that the GST is applicable only on the commission deducted by the clubs, all the racing clubs which were reeling under heavy financial strains will start functioning on a healthy note. The punters are likely to get attractive dividends on their investment in especially the ‘win’ and ‘place’ pools of the totalizator operated by the respective race clubs.
A race punter Nageswara Rao (name changed) who plays only on place bets said,” Last 3 years have been horrible for me” When interacted he said “ I only expect 1 rupee or 2 rupees on a hot favorite which will not miss the board in either 2 or 3 races of the day and I invest Rs. 5000 on each place bet and go home with a reasonable profit of Rs4000 to 5000 a day”. This has been my practice for the last 20 years in the tote. I never played a win bet or bets on bookie outlets for the fear of losing. I was successful on 90% of my attempts. But when the new GST rules came in to force from Jan 2018, I hardly found any such safe bets offering some returns in the tote. Mostly they are money back. Because of the 28% cut on the turnover apart from club
commission.
Now I feel that I can expect some reasonable returns from my race punting as this 28% GST cut rule has been removed by the high court. The Govt may appeal in Supreme court but this is highly unlikely considering a recent 3-member committee appointed to look into the same issue before the judgement came out. There are many such punters waiting to pump money on the tote and the dividends will be very attractive compared to last 3 years.
The 28% cut under turnover was imposed by the then finance minister Arun Jaitley without realizing the impact that it would affect the racing industry. The race clubs have made umpteen requests but went to the deaf ears. We also wrote an article in this regard which can be read by clicking the following link.
Now that corona 2nd wave has adversely affected the racing industry 2nd time within a year. This tax relief should give some fillip to the sports when resumed.
The punters are expecting the sports to resume in mid July 2021 in all probability after the second wave of Corona subsides. In the meantime the
race clubs are taking efforts to keep the horses fit for the action.
