Views diverge on tax valuation mechanism, rate tweaks –

The eight-member ministerial panel, headed by Meghalaya Chief Minister Conrad Sangma, is expected to finalise its report after the legal opinion and submit it to the GST Council, which is 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 said.

“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 told reporters after the meeting. Mauvin Godinho, Goa’s Minister for transport, Panchayati Raj and Industries and Member of GST Council, said, “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, however, said they are sticking to the rate of 28 per cent and “there is no question of restructuring” and it is only the valuation mechanism which has to 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 told The Indian Express.

Referring to court judgements, Bhattacharya said a legal opinion has to be sought given the legal rulings so far. “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.

The GoM in its report presented before the Council had recommended a uniform rate of 28 per cent on casinos, race courses and online gaming with no distinction based on whether an activity is a game of skill of chance or both. For valuation in case of casinos, the GoM had suggested that GST be applied at 28 per cent on full face value of the chips/coins purchased from casino by a player and that once GST is levied on purchase of chips/coins (face value), no further GST would apply on the value of bets placed in each round of betting including those played with winnings of previous rounds. It also suggested 28 per cent GST on the services by way of access/entry to casinos on payment of consideration/entry fee which compulsorily includes price of one or more supplies such as food, beverages etc.

After the 47th GST Council meeting held in June, the GoM was given a 15-day extension with concerns raised primarily by one state — Goa. After the meeting, Union Finance Minister Nirmala Sitharaman had then said that even as the Chair of the GoM, Meghalaya Chief Minister Conrad Sangma, presented 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 before the Council and not just 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 said.

In its two meetings held in May this year, 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 activities involve “financial risk and are addictive”, the GoM report said.