Haryana Amends GST Act to Tax Online Gaming, Streamline Compliance, and Revise Appellate Structure

The Haryana Goods and Services Tax (Amendment) Act, 2023, received the assent of the Governor of Haryana on September 13, 2023, and was subsequently published for general information on September 15, 2023, as Haryana Act No. 21 of 2023. This legislative instrument serves to further amend the Haryana Goods and Services Tax Act, 2017 (the principal Act), introducing significant changes primarily concerning the taxation of online gaming, procedural compliance, and the appellate framework. While sections 2 to 27 of the Act will come into force on such dates as the Government may appoint by notification in the Official Gazette, with the possibility of different dates for different provisions, certain amendments, such as those related to exemption from registration under section 23(2) and Schedule III concerning specified actionable claims, are deemed to have been in effect retrospectively from July 1, 2017.

The Act introduces new definitions within the principal Act, including "online gaming," which refers to the offering of a game on the internet or an electronic network, encompassing "online money gaming." "Online money gaming" is defined as online gaming where players pay or deposit money or money's worth, including virtual digital assets, with the expectation of winning money or money's worth in any event, irrespective of whether the outcome is based on skill, chance, or both. A new category of "specified actionable claim" has been inserted, covering claims involved in betting, casinos, gambling, horse racing, lottery, or online money gaming. Crucially, the legislation provided: “Provided that a person who organises or arranges, directly or indirectly, supply of specified actionable claims, including a person who owns, operates or manages digital or electronic platform for such supply, shall be deemed to be a supplier of such actionable claims, whether such actionable claims are supplied by him or through him and whether consideration in money or money's worth, including virtual digital assets, for supply of such actionable claims is paid or conveyed to him or through him or placed at his disposal in any manner, and all the provisions of this Act shall apply to such supplier of specified actionable claims, as if he is the supplier liable to pay the tax in relation to the supply of such actionable claims;” This provision clarifies the tax liability for entities facilitating such activities. The Act also mandates registration for every person supplying online money gaming from a place outside India to a person in India. Furthermore, it introduces a penalty for electronic commerce operators who facilitate supplies by unregistered persons, ineligible inter-State suppliers, or fail to furnish correct details in their statements.

The legislative intent behind these amendments is to align the State's GST framework with the evolving digital economy, particularly in the realm of online gaming and virtual digital assets, and to address ambiguities in the taxation of certain activities. The earlier legal position lacked explicit provisions for taxing online money gaming and clearly defining the supplier in such transactions, leading to potential revenue leakage and compliance challenges. The Act addresses these gaps by providing clear definitions and deeming provisions, ensuring that the supply of specified actionable claims, including online money gaming, is brought within the ambit of GST. It also introduces a new clause to disallow input tax credit for goods or services used for corporate social responsibility (CSR) obligations under the Companies Act, 2013. Significant procedural changes include the introduction of a three-year time limit for registered persons to furnish details of outward supplies, returns, and annual returns, and for operators to furnish statements, from their respective due dates. The Act also modifies the calculation of interest on delayed refunds and extends the period for furnishing a valid return after an assessment order from thirty to sixty days, with a further sixty-day grace period upon payment of an additional late fee. A major structural change involves the substitution of provisions related to the Appellate Tribunal, stipulating that the Goods and Services Tax Tribunal constituted under the Central Goods and Services Tax Act, 2017, shall serve as the Appellate Tribunal for appeals against orders under the Haryana Act, thereby omitting previous sections related to the constitution of State and Area Benches and streamlining the appellate process. Additionally, the Act introduces a new section allowing for consent-based sharing of information furnished by taxable persons with other systems, subject to recommendations from the Council and prescribed conditions, enhancing data interoperability while safeguarding privacy through consent mechanisms. Amendments to compounding of offences under section 138 also reflect a revised approach to penalties and their application.

Keywords: Haryana GST Amendment, Online Gaming Tax, GST Compliance, Virtual Digital Assets, GST Appellate Tribunal, Haryana Act 21 of 2023, Actionable Claims, E-commerce Operator Penalty, Tax Procedural Changes

Geo Tags: India, Haryana District: Not Applicable