The Supreme Court has recently stayed the order of the Single Judge of the High Court of Karnataka that quashed the 21000 Crore Rupee GST Demand served on Gameskraft.
The Division Bench of Chief Justice of India DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, has called for a response from Gameskraft and scheduled a follow-up hearing in three weeks.
CJI Chandrachud reassured orally that nothing significant will transpire within the next three weeks during the proceedings.
This bench is currently reviewing the Central government’s appeal against the High Court’s ruling, which affirmed that Rummy, whether played with or without stakes, does not constitute gambling.
N Venkatraman, Additional Solicitor General had drawn the attention of the Apex Court to a decision of a three Judge Bench of this Court in Skill Lotto Solutions Private Limited vs Union of India & Ors, in which the judgement has been distinguished in paragraph 7 of the impugned judgement at page 320 is seriously in question.
Gameskraft had received the notice from GST authorities on September 8th of the previous year, demanding a staggering ₹21,000 crore. This notice was subsequently contested in the High Court, where a single-judge issued a stay order on September 23, 2022, citing numerous contentious aspects of the case.
A GST raid at Gameskraft’s office in November 2021 resulted in an order to freeze all the company’s bank accounts.
Initially, Gameskraft was alleged to have evaded ₹419 crore in taxes, but this figure escalated to ₹5,000 crore and eventually surpassed ₹21,000 crore after July 2022. The authorities then altered their narrative, suggesting that Gameskraft may be involved in betting.
In the High Court order, Justice SR Krishna Kumar asserted that Rummy, whether played online or in physical form, predominantly involves skill rather than chance.
As a result of the High Court’s decision, online Rummy games and other digital games on Gameskraft’s platforms were not classified as ‘betting’ or ‘gambling,’ making them exempt from taxation.
The Karnataka government has also submitted a plea contesting this ruling in the Supreme Court.
The Special Leave Petition is now listed to be heard on 10 October 2023.
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