2021 (8) TMI 1007 - HC - GST

Constitutional validity of Rule 31A(3) of the CGST Rules, 2017 - HELD THAT - This Court 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.

Summary

Issues:
Challenge to the constitutional validity of Rule 31A(3) of the CGST Rules, 2017.

Analysis:
The High Court of Karnataka heard the present writ appeal arising from an order dated 02.06.2021 passed in W.P.No.11168/2018. The appeal was admitted for final hearing after considering the arguments of the learned counsel for the parties. The respondents had challenged the constitutional validity of Rule 31A(3) of the CGST Rules, 2017, and the Single Judge had declared the rule as ultra vires. Rule 31A pertains to the value of supply in the case of lottery, betting, gambling, and horse racing. It specifies the determination of the value of supply in these specific cases, including lotteries run by the State Government and actionable claims in the form of chance to win in betting, gambling, or horse racing in a race club.

The Court took note of the arguments presented by the learned Additional Advocate General and the counsel for the parties. Reference was made to the judgment in Skill Lotto Solutions Pvt. Ltd. vs. Union of India and Others reported in 2020 SCC Online SC 990. After hearing all parties, the Court was of the opinion that the appellants had made out a prima facie case for the grant of interim relief. Consequently, the operation of the impugned order declaring Rule 31A(3) as ultra vires was stayed until the next date of hearing, which was listed for 07.10.2021. The judgment provided a detailed analysis of the legal provisions and arguments put forth by the parties, leading to the decision to grant interim relief and stay the operation of the impugned order.