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Informist, Friday, Nov. 28, 2025

 

NEW DELHI – The Supreme Court will decide on transferring to one high court for hearing, the petitions filed in various high courts against goods and services tax levied on the full amount deposited with horse racing clubs by persons betting on the races. The apex court has sought the goods and services tax department's response on Mysore Race Club Ltd.'s plea seeking a transfer of these cases either to Madras High Court or Telangana High Court. Currently, a batch of petitions have been filed on the issue in the Madras High Court, Telangana High Court, Bombay High Court, and Calcutta High Court.

 

Transferring the cases and consolidating all the pending writ petitions is in the interests of justice as it would avoid the possibility of contradictory judgements, Mysore Race Club said. The petitioner said there were common questions involving the interpretation of provisions of the amendments passed in the Central Goods and Services Act and State Goods and Services Act. The findings of the courts will have far-reaching implications for the general public, the centuries-old institution of horse racing, and all the parties, the club said.

 

Mysore Race Club conducts horse races and facilitates betting activity amongst "punters", that is, persons who place bets against each other. Horse racing clubs only provide a service of pooling the bets placed by punters amongst themselves and redistribute the pooled amount to the winning punters, the petitioner stated. Horse racing clubs provide this service by way of an electronic device called the "totalisator", it added.

 

Under established law laid down by the top court, horse racing was considered as a game of skill, said the petitioner. The apex court also held that horse racing clubs do not indulge in betting activity and are only entitled to fixed commission, said the petitioner. 

 

For the service of operating the totalisator and pooling bets placed by punters amongst themselves, the horse racing clubs charge a fixed commission, said the petitioner. Prior to the GST regime, the horse racing clubs paid service tax on the fixed commission for providing such totalisator service, said the petitioner. After the introduction of the GST regime, the horse racing clubs were mandated to pay GST on the fixed commission earned for providing the totalisator service, said the petitioner.

 

However, the government introduced Rule 31A(3) to the Central Goods and Service Tax Rules, 2017 in January 2018 which had the effect of levying GST not just on the commission, but on the entire value of the bet, said the petitioner. This is akin to the stock-broker or the real estate agent being asked to pay tax on the entire transaction value as opposed to his commission, it added. Later, the single judge bench of the Karnataka High Court declared Rule 31A(3) as ultra vires the CGST Act. The division bench of the high court is still hearing a challenge by the government.

 

During the pendency of the above appeals in the high court, the government passed amendments in 2023 which allowed goods and services tax to be levied on the full amount deposited by the persons betting amongst themselves on the horse racing clubs. Thereafter, petitions were filed in various high courts against the 2023 amendments.  End

 

Reported by Surya Tripathi

Edited by Ashish Shirke

 

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