Supreme Court to Hear SLP against Gameskraft Challenging Karnataka HC decision on July 15, Alongside Transferred Cases [Read Judgement]
The transferred cases are filed by Vision 11 Gaming Private Limited, NXGN Sports Interatvice Private Limited, Palayerzpot Media Pvt Ltd. and Reign Games Private Limited
Karnataka High Court on Gameskraft – Gameskraft Supreme Court case – DGGI vs Gameskraft – Gameskraft – taxscan
Karnataka High Court on Gameskraft – Gameskraft Supreme Court case – DGGI vs Gameskraft – Gameskraft – taxscan
The Supreme Court has listed the Special Leave Petition ( SLP ) filed by the Directorate Genetral of Goods and Services Tax Intelligence ( DGGI ) against the Gameskraft Technologies Private Ltd challenging the Karnataka High Court’s decision on Jusly 15, 2024 alongwith the transferred cases.
The bench of Chief Justice D Y Chandrachud, Justice along with Justices JB Pardiwala and Manoj Misra has directed to list the case on 15th july.
The other matters which were tagged along are Writ Petitions filed by E-Gaming Federation, Play Games 24 Private Limited. 3 SLPs were filed by Excel Rasayan Private Limited, M/s Swati Realty, Manas Vihar Sahakari Swas Samiti Limited and Anand Rathi.
The transferred cases are filed by Vision 11 Gaming Private Limited, NXGN Sports Interatvice Private Limited, Palayerzpot Media Pvt Ltd. and Reign Games Private Limited
A Single Bench of Justice S R Krishna Kumar quashed the GST Show-Cause Notice against the Gameskraft which had imposed Rs. 21,000 Crore at 28% GST on online gaming services provided to gamers.
Khaitan & Co. appeared for Gamescraft in the case. According to Sudipta Bhattacharjee, (Indirect Tax partner at Khaitan & Co.), “The GST authorities sought to levy GST against Gameskraft and in the last few months, against the entire online skill-gaming sector in India in a manner that is applicable only for companies indulging in ‘betting and gambling’, thereby obliterating the centuries old legally recognized distinction between ‘games of skill’ and ‘games of chance’. This is a historic judgement for the entire online gaming sector in India and it is heartening to note that a position of law which has been settled for more than 60 years, that games of skill cannot fall under the ambit of ‘betting and gambling’ even if played for stakes, has not been deviated from.”
In August 2022, the GST Intelligence unit issued a show cause notice to Gameskraft, demanding Rs 20,989 crore in taxes for the period between August 2017 and June 2022. The notice classified Gameskraft's services as betting and gambling, subject to a 28% GST under Rule 31A of the CGST Rules, 2017. Additionally, the GST department alleged that the company failed to issue invoices to its customers, violating Section 15(3) of the CGST Act, 2017.
Gameskraft, in its plea to the Karnataka High Court, argued that it had already paid over Rs 1,500 crore in GST and contended that the tax department failed to differentiate between games of skill and games of chance. The Karnataka High Court sought input from the Directorate General of GST Intelligence ( DGGI ), which maintained that Gameskraft had filed their taxes under the incorrect category and asserted that the company's services should be taxed at the 28% rate.
In October 2022, the E-Gaming Federation ( EGF ), a not-for-profit gaming body, filed an intervention application, emphasizing that the outcome of the Gameskraft case would have significant implications for the entire online gaming industry, including online rummy operators.
To Read the full text of the Order CLICK HERE
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