Snehal Upadhyay –
Published on: August 16, 2021 11:25 IST
Karnataka High Court’s Division Bench put a stay on the operation which was directed by a single Bench on June 2.
In the directions, the division Bench observed that Rule 31A (3) of the Central Goods and Services Tax Rules, 2017 as amended in terms of the notification dated 23.01.2018 as ultra vires the provisions of the Central Goods and Services Tax Act, 2017 Act and Rule 31A of the Karnataka Goods and Services Tax Rules, 2017, as ultra vires the provisions of the Karnataka Goods and Services Tax Act, 2017.
A Division Bench comprising of Justice Satish Chandra Sharma and Justice Sachin Shankar Magadum was hearing the appeal challenging the judgement of the single Bench which was filed by the Union of India.
Additional Advocate General Dhyan Chinnappa was representing the state and Advocate Vikram Huilgol was representing the Union of India.
Advocate Vikram Huilgol highlighted the Court with the judgement given in the case of Skill Lotto Solutions Pvt. Ltd. vs. Union of India which upheld the validity of Rule 31A (3) which governs the valuation of supply of actionable claim in the probability of winning in betting, gambling or horse racing in a race club on which the tax is calculated.
The Bench noted this point and ordered that “This Court has also heard learned counsel for the respondents and is of the opinion that the appellants have been able to make out a prima facie case for grant of interim relief. Resultantly, the operation of the impugned order shall remain stayed till the next date of hearing. List on 07.10.2021.”
The Bangalore Turf Club Limited and Mysore Race Club Limited had filed a petition in the Court alleging the legislative intent of making them pay Goods and Services Tax (GST) on the whole amount which they got in the totalisator.
The single Bench of Justice M Nagaprasanna stated that “The tax is only on the supply of goods and services; on a value determined under Section 15 of the Act which deals with the value of taxable supply.”
The Bench also opinioned “Rule 31A(3) in the form that it is, perforates the nexus between the measure of tax and the taxable event as the fully paid value into the totalisator is directed to be assessed for payment of GST under the Act. Therefore it becomes necessary to consider Rule 31A(3) qua the activity of the petitioners and that becomes the kernel of the entire issue”, the Court had opined.
Click here to Read/Download the Order
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