Mumbai: Horse owner must pay 18% GST on racing prize

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Vijay Baburao Shirke, owner of several winning racehorses, is often spotted at derby matches and in sports sections of newspapers. This time, he is in the limelight due to an advance goods and services tax (GST) ruling sought by him. Advance ruling authorities recently agreed with his view that horse owners must pay 18% GST against the prize money earned by them. Shirke’s horses have emerged as winners in races organised by several clubs, including the Royal Western India Turf Club (Pune and Mumbai), Mysore Race Club and Bangalore Race Club, to name a few.

As owner of the winning horses, he is awarded prize money by race organisers. In 2012, when service tax was introduced, Royal Western Turf Club had informed horse owners that their prize money would be subject to it. When GST was introduced on July 1, 2017, Shrike continued to pay GST on the prize money earned by him, as the definition of “service” was identical under the GST Act. From the date of introduction of GST till the end of February 2019, he had received approximately Rs 3 crore as prize money and had duly paid GST.

As some of his competitors did not do so and he was advised that receipt of prize money is not a “taxable supply” under GST, he approached the GST Maharashtra Authority for Advance Ruling, to seek clarification and a closure on the issue. The Advance Ruling Authority, in its October 4 order, affirmed his view that GST should be paid in prize money. While advance rulings are binding only on the applicant and the transaction for which the ruling is sought, they have a persuasive value in similar cases. Government officials TOI contacted did not comment on whether other cases where GST was not paid will be followed up for suitable action.

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