GoM meet: Views diverge on tax valuation mechanism, price tweaks

As the Group of Ministers (GoM) on Casinos, Race Courses and Online Gaming met on Monday, divergent views emerged concerning the valuation mechanism for levying tax underneath the Goods and Services Tax (GST) regime, with some states stating that the tax price will stay 28 per cent and discussions are required just for the valuation mechanism, whereas some others indicating charges might be charged otherwise for these classes. There was consensus, nevertheless, on in search of a authorized opinion given the varied precedents set by court docket rulings on associated issues, which is anticipated to be finalised in 7-10 days.

The eight-member ministerial panel, headed by Meghalaya Chief Minister Conrad Sangma, is anticipated to finalise its report after the authorized opinion and submit it to the GST Council, which is more likely to meet later this month. “After taking the opinion of stakeholders & after successive meetings to seek the suggestions of all members, we will take legal opinion before submitting the final report,” Sangma stated.

“We are talking of three different games, all games are not the same. And this GoM has been asked to look into three separate games which function in three very, very different ways. The gross gaming revenue is something that is applicable to casinos, you know. The methodology on where and how GST should be collected are areas which we are looking at. So all these things are being debated,” Sangma informed reporters after the assembly. Mauvin Godinho, Goa’s Minister for transport, Panchayati Raj and Industries and Member of GST Council, stated, “I think it is an internationally accepted practice there is no doubt about that, but how the mechanism is to be worked out is the issue, we are applying our minds and there is an element of legal opinion also being taken to shore things up further.”

West Bengal’s Finance Minister Chandrima Bhattacharya, nevertheless, stated they’re sticking to the speed of 28 per cent and “there is no question of restructuring” and it’s only the valuation mechanism which must be finalised. “Horse racing and online gaming are saying they should be exempted in line with actionable claims. Casinos stand on a different point, they say that they are into betting and gambling and chips at entry point should not be taxed, it is only the prize money which should be taxed. But we said no, we cannot let that go because that is the right given to the participant to participate. From there it starts. Everyone would then want to play at the casino. So it’s not only the transaction on the table, the right is being given at the entry point, so that has to be taken into account. Full value has to be taxed. The case of casinos is not about 28 per cent or 18 per cent or 12 per cent. Their case is only that they be taxed on the transaction table but we opposed it and Uttar Pradesh also fully supported the stance of West Bengal,” she informed The Indian Express.

Referring to court docket judgements, Bhattacharya stated a authorized opinion must be sought given the authorized rulings to this point. “Some representations for gaming were about being a game of skill. Judgements were shown that the game of skill cannot be distinguished from a game of chance…no consensus was there. Legal opinion will be taken on these two issues because there are so many judgements, so consensus has been for that part. For casinos, we have already recorded our note of dissent and will be giving our views in writing in a day or two. I have already stated it and stuck to it. Not only me, I was fully supported by Uttar Pradesh on all counts,” she added.

ExplainedReport probably after authorized opinion

The eight-member ministerial panel, headed by Meghalaya Chief Minister Conrad Sangma, is anticipated to finalise its report after the authorized opinion and submit it to the GST Council, which is more likely to meet later this month.

The GoM in its report offered earlier than the Council had advisable a uniform price of 28 per cent on casinos, race programs and on-line gaming with no distinction primarily based on whether or not an exercise is a recreation of talent of likelihood or each. For valuation in case of casinos, the GoM had advised that GST be utilized at 28 per cent on full face worth of the chips/cash bought from on line casino by a participant and that after GST is levied on buy of chips/cash (face worth), no additional GST would apply on the worth of bets positioned in every spherical of betting together with these performed with winnings of earlier rounds. It additionally advised 28 per cent GST on the providers by means of entry/entry to casinos on fee of consideration/entry charge which compulsorily contains worth of a number of provides equivalent to meals, drinks and so forth.

After the forty seventh GST Council assembly held in June, the GoM was given a 15-day extension with considerations raised primarily by one state — Goa. After the assembly, Union Finance Minister Nirmala Sitharaman had then stated that even because the Chair of the GoM, Meghalaya Chief Minister Conrad Sangma, offered his report, he requested that the Minister of Goa (Mauvin Godinho, Goa’s Minister for Transport, Industries and Panchayats Raj and Goa’s Member of GST Council) will place his view earlier than the Council and never simply the GoM.

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“So he was given a chance to speak in front of all the members of the GoM wherein his request was that the treatment for casinos should be different. He gave a complete presentation and therefore it was decided that Conrad Sangma, the Chair of that GoM will once more hear Goa and even as this decision was taken, some of the members of that GoM felt that if there’s a window for casinos to be heard again, then horse racing be also heard again, let online games be also heard again. We have allowed that but with the condition that by July 15 the report should be back again with us. So the council will then have a look at it. And as a result we have decided that the Council will meet on this GoM’s agenda and one more…either on August 1 or in the first week of August,” she stated.

In its two conferences held in May this 12 months, the GoM held the “general view that these activities because of their nature and negative externalities should be levied a higher incidence of tax” and that these actions contain “financial risk and are addictive”, the GoM report stated.