The Managing committee of the Bangalore Turf Club (BTC) were stunned at the start of the prestigious summer season, the Service Tax Department serving an order to the club to pay up the service amount,  Rs 6.70 crore at the earliest.  The tax department made it clear that the service pertained to veterinary services, testing of samples abroad and a number of other other services provided by the club. 

The managing committee of the club had stopped paying the service tax on  betting at the tote contending that  that betting on totalizator does not attract service tax. The club earlier was collecting half per cent from the collections at the tote  for this service  but later decided to do away with it and  it is learnt  had  written to the service tax department for the refund of the amount paid.  The money back request according to a few tax experts  triggered the service tax department to re-open the old file and look at the claim and pass an order which shocked the mandarins of the club.

 A senior member of BTC pointed out that the club can contest the claim but need to  deposit 7.5 percent of the amount.  In his opinion the club  can still fairly contest the case.

The service tax department had made this claim and alerted the club  six years ago  contending that the various services offered by the club attracted the provisions of service Tax. The Commissioner has also slapped a fine of Rs 1 lakh each on former Chairman of the club,  Harimohan Naidu, Harindra Shetty, D M Kumaraswamy and Dr Srinivas Gowda who held the post during the disputed period. The former Secretary  Nirmal Prasad of the club has also been fined Rs 1 lakh.

It maybe recalled  that the  club, after seeking legal advise from Aravind P Dattar, a practicing advocate of Supreme Court and an expert on service tax matters, had been paying service tax on tote betting. Since the tote operations by the club is not deemed as gambling activity by the club, there is confusion on this score.

The service tax department is of the view that since the club is  facilitating a betting service it comes under the  provisions of service tax. The BTC had been paying the tax  before the present committee chose to stop payment without seeking a  written clarification from the taxmen. Now that the service tax department  has passed an order, it remains to be seen how the committee copes with the big problem ahead.